Preamble

The House met at half-past Nine o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

British Invention and Innovation

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Conway.]

Mr. David Shaw: The United Kingdom has an amazing history—indeed, it has an illustrious history—of inventiveness. Over the years, many people have moved not only this country but the world forward. We have had world-beating inventions for many years. I shall draw hon. Members' attention to some of the inventions that Britain has made in the past 100 years. This country has produced products that have significantly changed the world.
Today, I am grateful for the opportunity to raise the issue of British invention and innovation. From time to time, hon. Members should acknowledge the skills and the abilities of many individuals who have helped this country and who have developed our industries and businesses as a result of small ideas which often had in their back rooms and in their garden sheds.
I shall refer to a small selection of British inventions over the past 100 years. In 1847, Charles Babbage effectively laid the foundations of the modern computer. It is difficult to believe that the computer is slightly more than 100 years old—one tends to think of it as a modern and up-to-date invention. In 1884, Edward Butler invented the motor cycle—obviously, the forerunner of today's motor cars. In 1895, Lord Rutherford managed to get radio signals to go one mile at Cambridge—that was the foundation of modern radio. Today, we listen to radio programmes that either excite or depress us.
In 1901, Hubert Booth invented the vacuum cleaner. I do not wish to be sexist, but that invention has changed the lives of women—and possibly a few men as well. In 1902, Dr. Lanchester invented the disc brake, primarily for the aircraft that were beginning to come into being. That invention has had great significance for the motor car and without it, many lives would not be saved today. While on the subject of lives being saved, I cannot fail to recognise that Sir Alexander Fleming invented penicillin in 1928. In 1926, John Logie Baird—a Scotsman; I am pleased to be able to mention Scotland—invented the television, something that has had a major effect on everyone's lives. People cannot grow up today without television having some effect or impact on their lives.

Mr. Adam Ingram: It is in the House of Commons.

Mr. Shaw: The hon. Gentleman points out to me that television has had an impact in the House of Commons, some 60 years after its invention.
The cat's eye, invented by Percy Shaw in 1934, is of great significance in relation to safety. It is difficult to think of those little light reflectors in the road as an enormous invention or innovation, but they have transformed motor transport around the world in terms of increasing safety.
In 1936, Frank Whittle invented the jet engine, which has transformed the approach to global living. As a result, each year, many millions of people engage in tourist activity, business activity, and other activities—numbers that were not previously considered possible.
I move on to 1959, when Sir Alec Issigonis was the author of what was more a great British innovation than an invention. The motor car was already in existence, but Sir Alec Issigonis thought up the concept of the mini-car—a revolutionary approach to the way in which cars were thought of at the time, and an example of what innovation, rather than invention, is about. Innovation is about change; about suddenly having the insight to grab hold of an existing invention and do something with it that has not been done before.
The motor car had been in existence for many years before 1959, but Sir Alec Issigonis took hold of it and said, "We need something new; something different." The motor car had been growing larger, but Sir Alec Issigonis reversed that trend. He counterthought, and his idea was in the opposite direction to the way in which innovation had been going until that time, but no one would deny that he was a man of his times, because the mini-car turned out to be the start of a new design trend. Motor cars are becoming smaller, producing great fuel-saving benefits.
While I am on the subject of minis, it would obviously be inappropriate not to mention Mary Quant, who is credited with inventing the mini-skirt in 1964. That is significant in relation to innovation and invention. I have always considered the fashion industry in this country to show great creativity, and that should be recognised.
I believe that many people are not aware of the significance of one specific scientific invention, because it tends to be much closer to the laboratory, but it is significant nevertheless. In 1944, Mr. Martin and Mr. Synge invented something called paper chromatography, which involves the ability to separate out complex chemicals. As a result, we have been able to analyse a multitude of substances for the benefit of mankind, in the pharmaceutical and consumer industries. I spent some time in my youth in a research laboratory, using chromatographic techniques on spearmint to ensure that our toothpastes today could be better flavoured than they were 30 or 40 years ago.
Those inventions, whether they took place in the laboratory, the back yard or the garden shed, have all developed into major, world-beating inventions. It has been suggested that 55 per cent. of all major inventions since the second world war have come from this country, compared with about 25 per cent. from the United States and 5 per cent. from America.
It was suggested to me—regrettably, it is one of the statistics that one cannot precisely prove—that about half the world's trade today is based on British inventions. I should think that much depends on whether one includes the motor car in that, but whether or not half is correct, the point is that a substantial part of world trade today is based on British inventions. We punch well above our weight in terms of our ability to develop inventions and have them accepted as a fundamental part of world trade.
If we are to go on leading the world, we must recognise that there is always more to be done and that more effort and energy is always needed from Government, from us as individuals and from the public at large. Indeed, one of the depressing factors about discussing inventions and innovation is that the public attitude towards inventions in this country appears sometimes to be very negative. Our inventor: always appear to be struggling to produce their inventions against the odds, and we often criticise ourselves for not being willing enough to accept new inventions and innovation.
It is one of the perversities of this country that, for all the negative aspects, our inventors struggle away and seem to overcome the negativism, and often produce bigger and better inventions as a result of the negativity. Nevertheless, that negativism is a problem and needs to be overcome, because many of our inventions are exploited overseas. However much Governments—of any political persuasion—do, we are confronted with the problem that an awful lot of inventions end up overseas.
I understand that some of the research that I quoted earlier has been carried out by JETRO—the Japanese equivalent of the Department of Trade and Industry. The Financial Times recently studied worldwide statistics and information on inventions, and carried an article suggesting that we are losing about £165 billion a year from our gross national product because, over the decades, we have been unable to take advantage of all our inventions in the way that we should have done. We need to examine whether there are ways in which we can bring that gross national product, that world trade, back to the United Kingdom—whether we can do more to develop our inventions.
I have no quarrel with the Government about whether the United Kingdom Government are supporting British inventions and inventiveness. Any Government who are putting more than £5 billion a year—in fact, about £6 billion at today's prices—into annual research and development, are putting a very large sum into advancing new inventions and inventiveness in the United Kingdom.
Although about 42 per cent. of that money is spent by the Ministry of Defence on military inventions, we should never forget that some of the greatest inventions of our time, and those that have had some of the biggest consumer impact, have been inventions designed for the military.
The Internet, of which we hear much these days, was designed for the United States military, but the British military has been involved in using and developing it, and much of the development of the information super-highway is now taking place in the United Kingdom because we have been quick, in this instance, to take advantage of those inventions from America, and there is no reason why we should not occasionally play the Americans at their own game.
Government help is available in many different forms. I wish to acknowledge the Government's most recent new initiative—the information society initiative, for which about £35 million is to be made available in recognition of the fact that the information super-highway will be enormously important, not only to this country, but to the world.
The information society initiative, which the Government have brought into being in only the past few weeks, recognises that the communications and telecoms and information technology sector in this country is expected to grow to at least 10 per cent. of United Kingdom gross domestic product not long after the year 2000. Based on current trends—many of the projections in that sector are often underestimates—the super-highway will be a world-changing new invention and innovation as it develops, with worldwide networks, and we need to ensure that the United Kingdom gets a considerable share of the benefits. I am very pleased that there has been a substantive initiative by the Government, to ensure that British business can take advantage of that.
After this debate, at the Conservative political centre, my hon. Friend the Minister for Science and Technology will launch his pamphlet on the information super-highway. I shall be in attendance, to support something which is enormously important and which, I hope, will ensure that a much wider audience becomes aware of what the information super-highway is about.
In the remainder of my speech, I should like to concentrate on the United Kingdom's smaller inventors—one of the purposes behind the debate. I was able to attend a reception organised by The Daily Telegraph last December at the natural history museum. I was grateful to be invited, as the event was designed to promote invention and innovation. As a result of attending that reception, I met not only a number of people in the media who were interested in inventors and invention, but one or two inventors.
One of the inventors who stimulated my interest was Trevor Baylis, who invented the clockwork radio that does not rely on electricity. I shall later explain why that invention is important.
Before I talk about the individuals I have met since then, I should mention that there is a 75-year-old institute in this country for inventors called the Institute of Patentees and Inventors, which was set up with the approval and assistance of the forerunner of the Department of Trade and Industry. It is a non-profit-making organisation, with subscribing and non-subscribing members of the public. It is also supported by, and gives information on complex issues relating to invention and innovation to, small manufacturing enterprises, medium-sized companies, educational establishments and many other organisations and businesses.
The institute receives an enormous number of inquiries from the public. Many people in this country invent things. Sadly, some people's inventions are not up to the standard required in the marketplace, but some people have genuine inventions that they do not know what to do with. They somehow find their way to the Institute of Patentees and Inventors. One problem for the institute is that it has too many inquiries from the public to handle. Its budget in the past few years has been only £35,000 a year, and it has had to exist on virtually nothing. It has been providing a service to vast numbers of the public and, as a consequence, it has been difficult for it to focus on helping individual inventors to any great extent due to its role as a public service.
I was pleased when the Department of Trade and Industry recently announced that it had given an award of £10,000 a year towards the institute's annual costs. While I am delighted that that sum is to help British invention,


I urge the Department, within its sizeable budget—1 recognise that it is not enormous in relation to many areas of government—to see whether it can edge up that budget slightly in future years. I do not think that many Ministers or hon. Members on either side of the House would begrudge £10,000, or even £20,000 or £30,000, being spent on helping British invention and innovation.
The institute has made another application to the Department of Trade and Industry because it wants to publish an updated version of its directory of contacts for inventors and innovators, so that they can be best informed of the amazing help available to them in this country. Inventors often do not know what is available and desperately need a contacts directory. The institute is going on the worldwide web—I believe that it has some trial pages and intends to ensure that a lot of information can be disseminated to inventors via the worldwide web.
It is important to look at ways in which the institute can be supported in its work. I fervently hope that it will be able to develop further into a royal academy. Here, I return to Trevor Baylis, whom I met at the reception held by The Daily Telegraph. When Trevor discovered that I was a politician, he wanted to explain not only his invention to me, but his ideas for a royal academy for inventors and innovation. He sees it as fundamental to helping inventors to bring their great British inventions to the marketplace.
I should explain why Trevor sees the academy as so important by giving him a little publicity for his invention. It is a remarkable invention and, clearly, not many people had thought of it. Trevor developed the clockwork radio in order to help to put radio into the third world. He developed it so that it could be used in areas with no electricity. He suffered a number of rejections during the development process. He says that such rejections humiliate one as an inventor when trying to get an important invention off the ground.
One of the other aspects of invention is that one never knows where help will come from. In Trevor's case, help came from the BBC World Service. When the World Service studied his invention, it recognised its importance for the third world and decided that it would be sensible to introduce Trevor to the BBC programme, "Tomorrow's World", in a final attempt to help him to secure the funding that would allow his invention to go into production. It was a make-or-break move for a great British inventor, and if it had not succeeded, the idea would have been lost abroad.
Fortunately, as a result of his going on "Tomorrow's World", the invention secured some financial backing and supporters. As a consequence, 1,000 radios a day are currently being produced in South Africa and there is a demand for many times that number. Many of the purchasers are charities and, in a short period, the turnover could well approach £30 million a year, with some of the benefit returning to this country. I am pleased to say that the Government have been giving their support, and Baroness Chalker, in her role as Minister for Overseas Development, has been very much involved in helping to establish, with the British embassy in South Africa, the initial production factory. President Mandela has taken a great interest in the invention and has met Trevor Baylis.
That is an example of one small British inventor, operating from Eel Pie island in Twickenham—from what is virtually a garden shed. That makes one think how one

can succeed in getting a British invention from a garden shed in Twickenham all the way around the world. It is a difficult task, which is why Trevor believes that we need a royal academy, where inventors could not only get together with other inventors to share their experiences, but meet entrepreneurs and others capable of helping them to develop their inventions.
Inventors occasionally meet the wrong sort of entrepreneurs and suffer what might proverbially be called the rip-off. A royal academy would prevent the rip-off and enable inventors to meet people who could assist them in developing their inventions. It is difficult to take an invention from a dream to a successfully marketable product. We must do more to ensure that our inventions reach the marketplace.
I shall briefly mention two other inventions of great relevance. I have no commercial interest in either of them, or in Trevor's invention, but they are worth mentioning. The first invention won the prize at the recent exhibition sponsored by The Sunday Times at the Barbican, which I was able to attend. I was pleased to see 150 British inventions there and I wish that I could mention them all in the debate.
The rules of the House do not allow me to produce an object in the Chamber unless I describe it for Hansard. This invention, which is definitely worth mentioning, consists of a map that is printed at 6 million dots per inch. It is printed so well that it is possible to carry maps of the whole United Kingdom on a few postcards in one's pocket. The invention comprises not only the maps, but the viewer that I hold in my hand. It has been designed carefully to allow the map to rest on a curvature in the viewer, which ensures that the magnifying glass eye-piece is always at the correct angle. That is the skill behind the invention as it was explained to me. I hope that I have done credit to its inventor, Jeffrey Woolf, in describing it.
The viewer went into production this week. It will be useful to those of us who get lost when driving around the countryside, as we shall be able to keep maps of the whole country in a small box in our glove compartment. More significantly, hon. Members will recognise the benefits for our military forces, which will have access to maps of the world on a few postcards. The invention has advantages for use in both civil and military life, and Jeffrey Woolf has done an enormous service to this country.
Although Jeffrey Woolf has been able to get that invention off the ground, he has at least one other invention that would also benefit this country. He has invented a revolutionary windscreen consisting of two pieces of glass with a see-through liquid in between. The liquid remains transparent while the car is under the control of its owner, but if someone breaks into the car and attempts to steal it, the liquid becomes opaque and it is impossible to see out of the windscreen. One may think that that is a brilliant invention that many people in the United Kingdom would wish to purchase in order to improve the security of their car. Sadly, to date, no British company has offered to take up Jeffrey's invention. At present, he is talking to a Belgian company and an American company that have expressed interest in his invention. I hope that a British company will come forward and back it in due course.
We should recognise that some of our inventors have slightly strange images. I hope that Joshua Silver, an academic at Oxford university, will forgive me for


describing how he introduced his invention to me. Joshua is sub-warden of New college, Oxford and is undoubtedly a first-rate academic. However, I thought his invention a little odd when I first saw it. How would hon. Members feel if they were approached by someone wearing a pair of goggle-like spectacles with syringes hanging on either side? I am sure that they would wonder what was coming.
In fact, the invention is a third-world eye test. Some parts of the third world do not have electricity, so the conventional eye tests that we have when we go to an optician cannot be performed. Joshua's invention works by pouring water into the syringes on either side of the goggle-like spectacles. One then squirts the water from the syringes into the goggles in order to move the lenses apart and create the number of dioptres that the person looking through the goggles needs in order to see properly. The invention allows eye tests to be performed in the third world without the use of electricity and conventional optical equipment. It is a very imaginative invention. Estimates show that at least 1 million people in the third world need spectacles, so it has enormous market potential. One might describe it as an eye-opening invention.
There are many other inventions to which I should like to refer. When I visited the inventions exhibition, I was enormously impressed by the material that warms up when an electric current is passed through it. Many people will say that the seats in their Swedish motor cars do that also. However, anyone who has sat in those seats will know that the filament that warms the seat is a wire that leaves a funny looped pattern on one's back. A British inventor has threaded the wiring through the material so that it warms the entire surface. The invention has benefits not just for car seats, but for diving suits and for use in industry, when people must be kept warm in adverse conditions. The material is called Gorix and I hope that a British company will develop it. However, when I spoke to its inventor at the exhibition, he told me that an American company was considering using it in car seats.
I was enormously impressed by another incredibly simple invention that has stayed in my mind: a safety lock for curtain rails in hospitals. Apparently 3,000 people die each year by strangling on curtains in hospitals. The safety lock is designed to break when a human's weight is put on a curtain. We must consider how we can do more to promote British inventions and innovation. We must try to produce those inventions in Britain and put them on the market.
I referred earlier to the work of the Institute of Patentees and Inventors. It is only fair that I mention also the chief executive of the institute, Paul Ambridge, who has devoted his life to supporting British invention and innovation. He works for the institute for no remuneration, except expenses, and he organised the exhibition at the Barbican to which I referred. I believe that we should examine the honours list in that context. The Prime Minister has called for the awarding of honours to a wider group of people, and it has occurred to me that British inventors and innovators have not appeared on our honours lists in recent years. A few have been recognised over the years, but I ask the House to consider also the fact that more than 100 civil servants receive honours each year.
We honour our business men who have clawed their way to the top of their field and who do much to promote British business overseas. However, we do not often honour the inventors who invent the products that those business men sell overseas. Perhaps we should be congratulating, supporting and honouring some of those imaginative people who never become millionaires. They have produced many small inventions over the years that are of tremendous benefit to this country, and I hope that the Government will consider recognising a number of our great inventors in future honours lists.
I draw attention also to the great British fashion industry. Some years ago, before I entered Parliament, I was financial adviser to one of Britain's prominent fashion designers. One day after I had given her an accountancy lecture, she said, "I wish that they had taught me that at fashion school." That made me reflect on the fact that there are few £500 million companies in the British fashion industry, although we have some of the best fashion designers in the world. Some of them are world beaters. They are fantastic at developing new ideas and imaginative products. I referred earlier to Mary Quant and the mini-skirt in 1964, but there have been many developments since then.
Although the Prime Minister recognises our designers by holding a regular reception and party at 10 Downing street on the eve of British Fashion Week, we still do not have major multinational businesses on the scale of Versace and Cardin. How can we achieve that? Perhaps the answer is in training, as the fashion designer I helped told me. We should consider whether fashion schools should teach more managerial, financial and marketing skills. Fashion students are taught a great deal about creative design, but not much about the practical aspects of getting the products out into the marketplace. Trevor Baylis made the same point when he wrote to me promoting the concept of a royal academy for invention and innovation as a practical bridge between the inventor and getting a product out into the marketplace.
We need to promote British invention and innovation, to bring benefit to the country. There should be more awards and competitions recognising British invention and innovation. Recently, an American millionaire established a new foundation within the Massachusetts Institute of Technology with a view to helping American invention and inventiveness. That was private sector money. We could do more to encourage people to work with British universities and set up competition and award schemes to help inventors and university graduates.
Our universities should provide more training in the practical aspects of invention and innovation. There should be finance and marketing courses for young graduates considering a career in scientific invention, to help them get their inventions out of the laboratories and into the marketplace.
We also need to educate our children, and we should consider whether the national curriculum should cover invention and innovation to encourage schoolchildren to think of new ideas. Many inventors succeed because they have a childlike ability to think across subjects as well as to think logically. Perhaps we should do more to encourage our children in that direction.
We need to do more in regard to finance—which is my background and that of my hon. Friend the Minister. Inventors always complain about the difficulties of getting


access to finance. I suggest that the contacts directory that the Institute of Patentees and Inventors plans to produce and the encouragement of venture capital in Britain—where it is better than anywhere else in Europe—could do a great deal to make it easier for inventors to obtain finance.
We need to do more about marketing, development and encouraging inventors to get their products into the marketplace. It does no harm to learn from missed opportunities. One does not have to be political to recognise that it can be useful to learn from one's mistakes. Governments of both political persuasions have had opportunities to do more.
We could do more to develop our institutions, some of which are a little stodgy in their approach. Inventors and innovators should be more welcome. We need greater recognition of inventors and innovators in the awards and honours each year. I hope that the royal academy that I mentioned earlier might be considered for funding by the Millennium Commission. Although one proposal that was backed by the excellent magazine Inventors World did not succeed in getting millennium money, I hope that people will agree that, in the year 2000, Britain should do something to celebrate British invention and innovation. I am talking about not a one-off building, event or activity, but something that might remain in existence for many years and could be visited by hundreds of thousands, if not millions, of people. We need something to inspire the thoughts of many people towards invention and innovation.
I also hope that we can do more to use new technology, such as the worldwide web, to promote invention and innovation. We have a long way to go, although we started from a very good base. It would be sad if Britain did not continue to develop our inventions. We need to be alongside the United States of America and Japan as one of the world leaders in invention. I hope that the Government and the Opposition will produce ideas to support that proposal. I hope that something like a royal academy will be established, and I look forward to my hon. Friend's comments.

Mr. Adam Ingram: I congratulate the hon. Member for Dover (Mr. Shaw) on securing the debate. The fact that he did not have sufficient time to cover everything demonstrates the need for more parliamentary time to be allocated to the subject, which is crucial to the competitiveness of British industry.
The hon. Gentleman set out a formidable list of inventions and discoveries by British scientists and inventors. I do not recall whether he mentioned the discovery, by a British scientist, of the electron in 1897—a discovery from which so much scientific and technological work derives. The hon. Gentleman asked for a number of Government initiatives. I am sure that he will join me in proposing the issue of a commemorative stamp next year, marking the centenary of the discovery of the electron.
The Government have a key role to play in creating the conditions for encouragement of invention and innovation. It is clear from his comments today that the hon. Gentleman recognises the importance of that role. The hon. Gentleman is not renowned for commitment to proactive government, believing instead in minimal,

"could not care less" government. He is known for belonging to the "get government off our back" school of thought. Therefore, it is good news that he is prepared to modify that quaint and damaging philosophy in regard to invention, innovation and related technological activities. I agree with much of what he said and I anticipate the Minister's response with interest.
The hon. Gentleman mentioned the invention by Trevor Baylis of a new radio which can be used in remote parts of the world and would allow those regions access to the BBC World Service. It is a pity that, although a British invention is on the front line of radio communications, the Government are cutting back on the message that we want to impart. Invention and innovation are essential to a strong, wealth-creating economy. They are also important in improving the quality of life through the provision of life-enhancing and life-giving drugs and of modern means of mass communication and the solving of environmental problems in Britain and elsewhere.
As the hon. Gentleman said, Britain has an enviable reputation for the number and quality of its inventors and innovators. That reputation goes back to the beginning of the industrial revolution and continues to the present day. It has to be accepted, however, that too many of the ground-breaking inventions discovered in this country were never translated into manufacturing strength. There is an all too depressing history of great ideas being discovered in the United Kingdom but developed elsewhere. That history cannot be undone; we must learn from the failures of the past and put in place mechanisms to avoid a repeat of such a mistaken approach to new ideas in the future. The hon. Member for Dover commented on some ways in which that could be done.
It must also be recognised that invention and innovation do not exist in their own separate compartments. They are by-products of a multi-faceted structure involving the private and public sectors, from education through centres of higher learning and research to a vibrant manufacturing base. If all those elements are not pulling together or are not in place, our overall capacity to discover new ideas and translate them into marketable products will surely flounder.
We still have a strong, well-respected science and technology base, from which our major inventors and innovators are still drawn. If it declines, so will our capacity to discover and to develop new ideas. Tragically, on any measure and by any analysis, our science, technology and research and development base is experiencing decline, and as a result of Government policies further decline will take place. Two recent publications of studies undertaken by the groups Save British Science and the Science Alliance, made up of trade unions involved in the sector, point all too graphically to the damaging effects of Government policies on the nation's science, engineering and technology base.
I do not agree with all the conclusions of Save British Science—a non-political group of eminent scientists who have developed a detailed analysis of what is going on—but its publication points out that one indicator of the UK's relative decline in the scientific sphere is the number of Nobel prizes obtained by scientists and researchers working in this country. In the decade following the second world war, 10 Nobel prizes were awarded to UK scientists. In the decade after that, we won 11; in the decade after that, 12. Between 1976 and 1985, however, we won only eight, and that dropped between 1986 and 1995 to only one.
That dramatic recent reduction in what could be classed as the high ground of scientific endeavour runs in parallel with the Government-induced collapse of the British manufacturing sector. Between 1979 and 1994, the proportion of gross domestic product generated by that sector dropped from 28.5 to 20.9 per cent. When the Government took office in 1979, there were 6.6 million jobs in manufacturing; by the end of last year that number had fallen to just 3.9 million. While the Government forced through that retreat from manufacturing, they also participated in a retreat from publicly financed research and development activity.
Save British Science points out in its publication:
The gap in total civil R and D investment between Britain and other countries remains wide, in some cases wider. In a unique act of policy the United Kingdom Government has deliberately reduced its investment in civil R and D in real terms. Expenditure in 1993 was approaching £500 million per annum less than in 1981 and it continues downward…as a fraction of national wealth there has been a steady fall from 0.72 per cent. of GDP in 1981 to 0.47 per cent. of GDP in 1995.
Those are dramatic and worrying trends, and the cuts are matched by others of similar dimensions in the higher education sector. As the Association of University Teachers and others have pointed out, the Government plan to cut £630 million in real terms from spending on higher education over the next three years. A 6.3 per cent. cut in spending in 1996–97 will be followed by cuts of 3.7 per cent. in 1997–98 and 1.9 per cent. in 1998–99. Perhaps more critically, the universities' capital funding allocation for England and Wales has been cut by 30 per cent—£110 million—in 1996–97, with a further reduction in the following year, giving a total 50 per cent. cut over the next two years.
It is hard to see how any of that can be seen to be encouraging industry to commit itself to long-term R and D investment or to be a facilitator of innovation and technology transfer.

Mr. Barry Sheerman: Does my hon. Friend agree that, with all those cuts in university research and development, it is hardly surprising that vice-chancellors and senior scientists in the university world are all talking about low morale? In some ways morale is more important than cash, but the latter is related to the former because there is a feeling that the Government do not care about innovation and research.

Mr. Ingram: I agree. If time permits, I shall discuss the collapse of morale among researchers. My hon. Friend is right to refer to the Committee of Vice-Chancellors and Principals, which has been highly critical of the Government recently—to the point of suggesting that cuts in medical research will lead to deaths. An anonymous spokesperson at the DTI tried to rebut that idea, with the result that the head of the British Medical Association accused the spokesperson of being a liar. That shows just how deep the anger runs in the university and research sectors.
The Government's attitude and cuts are hardly likely to lead to a resurgence of Britain's pre-eminence in the generation of innovative ideas or new inventions. All in all, the picture presented is a dismal one. I realise that the Minister may claim that he has other indicators pointing

to successes. He is likely to say that R and D has increased in real terms in the past year and now stands at £14.6 billion. That is true; but a careful analysis of the statistic by comparison with our major international competitors shows that in certain key sectors—aerospace, telecom, cars and chemicals—we are lagging behind.
Much of the increased expenditure is down to one sector—the pharmaceutical sector—coupled with an unexpected rise in defence R and D. The Minister must therefore deal with the real dimensions of Government policy and their impact on the nation's science and R and D bases. He must not rest on a few specious feel-good indicators. Without a commitment to research, there is little hope of expansion at the level of innovation and invention.
That relationship is borne out by recent figures produced by the Organisation for Economic Co-operation and Development, which measures the level of relevant activity in a country by its inventiveness co-efficient: defined as the number of patent applications filed by organisations in a given country per 10,000 of population. The UK co-efficient fell from 3.71 in 1981 to 3.23 in 1993. In the same period, the OECD average rose from 4.38 to 5.61.
The reason for the decline is clear. The most recent OECD science and technology indicators show a dramatic fall in the number of UK companies and organisations applying for patents in the UK—from just under 21,000 in 1981 to just under 19,000 in 1993. While I accept that the details of patent data should always be treated with care, the overall trend speaks for itself. Put simply, it would appear that there is less innovation in the UK under the Government than there was before they took over.
The hon. Member for Dover is to be congratulated on stimulating today's debate. He has highlighted several concerns, and many others could he examined. If time permitted, it would be useful to look at how the Government are undermining areas of research excellence under their direct control—the public sector research establishments, which could be used as part of an incubator strategy for small start-up companies looking to test innovative ideas. The hon. Member for Dover mentioned that possibility. Those establishments are faced instead with—at best—contraction to possible privatisation or even closure.
I understand that the Deputy Prime Minister has directed Ministers to examine the future of the research establishments with the object of obtaining more contracts from the private sector—not in itself a bad thing—privatising them, or rationalising them. No mention is made in that directive of the overall scientific objectives of the establishments and how they could be used to create wealth or enhance the quality of life. Is the Minister convinced that such an approach helps in any way to bolster or add to the sum of innovative activity?
There is significant demoralisation within the nation's university research base, which is the generator of so many new ideas and innovations. There is an increasing movement towards short-term temporary contracts for so many researchers. There were 11, 500 such contracts in 1982, but there were 21,500 in 1994, and the trend continues. Researchers in such circumstances spend so much time worrying about the future and trying to generate more finance to keep themselves in a job that


they overlook many new ideas. There is a less conducive environment nowadays within our centres of research excellence to stimulate the pursuit of new ideas.
It would be tempting to enter into a debate on the many detailed ways in which a Government can assist in the generation of new and innovative ideas, and the ways in which the inventor can be helped to the market, but that would be the wrong approach. The debate should focus not on the minutiae of Government policy or on whether this or that glossy shop-window initiative is working as intended by the Department of Trade and Industry, but on the fundamentals of Government policy.
If the Government continue to erode and undermine the very fabric of the nation's science, engineering and research and development bases, it does not matter how many small-scale initiatives they start. Either the talent will not be there to participate in such initiatives, or it will have gone abroad to a more fertile innovative environment. The Minister must take that reality on board. For those reasons, the Labour party is committed to improving the nation's education base, to increasing the skills of the work force, to re-energising the public sector research base in universities and other public sector research establishments and to developing a coherent and structured approach to pushing forward the technology foresight programme in a co-ordinated and cross-departmental approach.
Above all, we need a Government who recognise science, technology, innovation and design as vital ingredients in the nation's economic health. A Government who cut and undermine that base sell the nation short. That is why the Government have lost the confidence of large sectors of British industry, and why they are under attack from the scientific and research community. The only hope for revitalising and expanding innovation and invention is the return of a Labour Government. That cannot come soon enough.

The Minister for Science and Technology (Mr. Ian Taylor): I, too, add my congratulations to my hon. Friend the Member for Dover (Mr. Shaw) on securing the debate, to which the House should pay attention. It is an important subject. Indeed, it is one that goes to the heart of so much that I as Minister for Science and Technology am trying to encourage. Apart from the party political comments with which the hon. Member for East Kilbride (Mr. Ingram) concluded his remarks, there was quite a lot in what he said with which I agreed. 1 shall deal with points of difference, because I think that he grossly underestimates the exciting things that are happening. However, the hon. Gentleman will have to wait while I first respond to my hon. Friend's excellent speech.
My hon. Friend's speech was excellent in its coverage and in its sympathetic understanding of the plight of inventors, many of whom feel rather lonely in their struggle to gain wider acceptance. I have met many inventors who are perhaps slightly more fortunate than others. If I am meeting them, it is probable that I am providing them with Government money through small firms merit awards for research and technology or support for products under research. Perhaps those inventors I meet have larger smiles than one or two of those my hon. Friend has met. There is no doubt, however, that some exciting things are happening.
Sometimes I have to face certain difficulties. For example, I went to Newcastle to see some exciting new developments. One of the awards that I gave was to a

company that had introduced a new generation of lugworm, which was capable of enabling fishing to take place 365 days a year. As the cameras were present, and as I was publicity conscious on behalf of the company while self-effacing on my own behalf, I agreed that I would hold up the lugworms to the camera, which I duly did. I replaced them when the photographs had been taken. The director of the company virtually embraced me and said, "Minister, you are extremely brave because they bite." He gave me that information after I had handled them. He added the good news that not so long before Neil Kinnock had had the opportunity to do the same thing, but had taken fright and not done it. At least my action demonstrated the vibrancy and standards of Ministers in this Parliament.
It is important that innovation is part of the title of the debate. Inventors and inventions are crucial, but the process of innovation is the broader encapsulation of turning a good idea into a commercially possible product, or even taking an old idea and turning it into a commercially viable product. When I first became Minister for Science and Technology I found it difficult to define innovation precisely. A definition quickly came to me, however, and the hon. Member for East Kilbride will enjoy the way in which it arrived.
I was at a university in front of an extremely large and erudite audience. The vice-chancellor gave me a lengthy introduction as the visiting speaker. Finally, he announced the title of my talk. It was one that I could not understand. Furthermore, it bore no resemblance to what I thought was the subject on which I was to speak. I stood in front of the audience, momentarily nonplussed. To gain time, I said, "I am from the DTI and I am here to help." Somebody at the front of the audience said, "Well, that is an innovation." In those circumstances, I rapidly realised that there were many things with which I had to get to grips.
Innovation and invention are crucial to the competitive challenge that Britain needs to face. I am sure that, unless we make better use of our inventors and innovators, the country will not be properly equipped to face the challenges of the next century.
I agree with my hon. Friend the Member for Dover that not all inventions have been properly understood. In a pamphlet imminently to be launched to an expectant world, which my hon. Friend was kind enough to flag, and which I have written, there are some examples of inventors' original purposes and activities not being fully understood. Alexander Graham Bell, who invented the telephone, thought that its main use would be to pipe music to remote groups of people. When Bell demonstrated his equipment in 1876 to Western Union, the company's executives wrote to him as follows:
Mr. Bell, after careful consideration of your invention, while it is an interesting novelty we have come to the conclusion that it has no commercial possibilities.
As we all know, Marconi invented radio. He thought that it would be used mainly for ship-to-shore telegrams. And, wait for it, a Government report of 1956 stated that
four computers would satisfy the needs of the whole nation.
That is an example that all Science Ministers and, if I may say so, Opposition spokesmen on science, should bear carefully in mind. It is possible that the Government do not always get it right. That is especially so in the context of the Government being asked to do more in recognising inventions and innovation. In my judgment, the


Government's role is that of a support and encouragement operation. We should not try to second-guess which ideas are most likely to be taken up by industry in the wider community.
I visit universities and companies throughout the country and I have no doubt that the creativity for which we have been famous is alive and well. We are doing some stimulating things. On a recent visit to Japan, interestingly, the one thing that Japanese industry wanted to talk to me about was the creativity occurring in the United Kingdom. As a result of their inward investment here, the Japanese see that creativity and are taking advantage of it. In conversations with Bill Gates of Microsoft, I found that he was certain that creativity in computer software existed in the UK in a way that it did not in any comparable economy, so we have tremendous opportunities to succeed and to take advantage of our creative skills in all dimensions, in research and in industry.
My hon. Friend the Member for Dover mentioned the fashion industry. I enthusiastically endorse his comments about the talent here. The Government have done much to sponsor London fashion week and we help to focus what the markets can offer in that sector. I should like even more attention paid to it.
My problem is that it is difficult to know which inventions will be the real killer applications, which ones we should be pushing and in which environment they are most likely to come. My hon. Friend mentioned many lone inventors and I have already paid tribute to them, but often some of the great breakthroughs in applications occur in big companies.
Dr. Coyne of 3M gave a fascinating speech at the DTI-sponsored innovation lecture. He said that one of the great skills that 3M had always had was that it encouraged research and other employees to come up with ideas and to develop them in company time, almost for themselves. One of the most interesting involved the use of sticky tape. An employee had tried to sell more sticky tape to car paint companies, which were using it for spraying and then had to pull it off and touch up the bits where it had taken paint off as well, which was time-consuming. He developed the idea of almost non-sticky tape, which has become part of our everyday lives. That was good lateral thinking. It was developed in 3M, which then adopted it.
There are many examples of companies not realising what they have. "Triumph of the Nerds" is a wonderful programme that has been running on Sunday evenings on Channel 4, I think. It showed that the Xerox board failed to realise that it had at its fingertips the future of personal computers. No personal computers ever had the Xerox name on them despite the fact that all the great breakthroughs were made in Xerox laboratories. We must, therefore, be extremely careful when trying to anticipate how the Government should best provide support in this sector because, even in circumstances where industry had a clear motive to bring things to the market, it has failed to do so.

Mr. Sheerman: I am listening carefully to what the Minister says, but what can the Government—any Government—do to stimulate across the board? He has mentioned some of the biggest companies. There is a

serious and worrying decline in research and development. I mentioned universities in my intervention. Even at the level of the small inventor, which the hon. Member for Dover (Mr. Shaw) mentioned, the enterprise allowance has been knocked back. We need a policy that stimulates such innovation across the board. Sir Ron Dearing is not dealing with the aspect even of universities. Surely we need a thorough look at what works and at what is successful, and then go for it.

Mr. Taylor: I am grateful to the hon. Gentleman for raising that. It is crucial that we do try to look across the board, partly because I cannot predict where good ideas will come from. I have been applying a logical policy. We are encouraging universities increasingly to consider their use of intellectual property. Recently, we have encouraged, through, for example, the DTI challenge competition, a technology transfer award, won by University of Manchester Institute of Science and Technology in conjunction with Aromascan. It produces an electronic nose for detecting changes in smells, which is crucial in certain production processes or where smell change can mean a security risk. Universities are increasingly being encouraged to consider spin-outs.
Some research councils are also considering that closely. The Medical Research Council has its own internal spin-out company. When I visit companies, I constantly deal with the point of them working more closely with universities. Our best universities are comfortably working with industry, but I need more industry to realise that that is the right way forward.
The DTI is applying pressure at each stage. We have the small firms merit awards for research and technology for companies with fewer than 50 employees. They can receive a grant of up to £150,000—which includes intellectual property, incidentally. That is a crucial early stage. Often, the companies employ not 50, but two or three people. I have given many of those awards, which migrate into a SPUR award for slightly larger companies with up to 250 employees.
The new business link structure throughout the country involves innovation credits and information technology counsellors. We give £250 to enable companies, especially small companies with a good idea for a product, to seek outside advice so that they can have the confidence to take the project further forward. I am convinced that I am putting in place a framework for the sort of objectives that the hon. Member for Huddersfield (Mr. Sheerman) seeks to influence me on.
My hon. Friend the Member for Dover raised many points and I cannot touch on all of them in the time remaining. Let me try nevertheless to do some of them justice. There is no doubt that this country is losing money because some of its inventions have gone abroad, but it is difficult to estimate it accurately. The figure that he quoted of nearly £160 billion a year does not seem to break down into anything that we can identify.
In a recent report, the Intellectual Property Institute has estimated that the share of gross domestic product produced by the 10 most patent-intensive industries by rank has increased only from 5.2 per cent. of GDP in 1985


to 7.81 per cent., or some £46.5 billion. Hence, it is difficult to see how the Exchequer could be losing £157 billion each year either as an additional contribution to GDP or, certainly, as tax, so we need to be careful about some of our use of figures. We do not want to get things out of context, exaggerate and then find that we cannot justify them.
My hon. Friend was right to say not only that the Government are spending about £6 billion a year, but that a proportion of that—around a third—was on defence research expenditure, which is not a growing sector. One of the intriguing things, however, is that much of what used to be spin-out from defence research is spinning in from civilian research.
Not long ago, I was at a company that will remain nameless, finding that a product that had been developed for civilian use had interesting defence implications. With the chief scientific adviser, I am considering some of the interfaces between civilian and defence research to ensure that this country's overall technological base is safeguarded. It is important that we do that.
One of the areas that I am concerned about is information communication technologies. The information society initiative is an important way of safeguarding the creativity in the UK that has stemmed from the liberalisation of communications here. We have a tremendous opportunity to be one of the research centres—if not the research centre—in many sectors of communication technologies in the world. The initiative was one of the key parts of the technology foresight exercise, which allowed the Government to attempt not to pick winners, but to identify the areas that we should concentrate on in our research and technology activities. Information communication technologies are crucial in that.
My hon. Friend mentioned the Institute of Patentees and Inventors, which is an important player in the matter. I am delighted that we have been able to provide some modest support for it. On his request for further funds, obviously I will always consider such requests. There are difficult competing indicators, but I want to draw his attention to other sectors where we are reinforcing the institute's work. In the business link system, for example, we provide genuinely independent advice for small companies and lone operators, not only on their corporate development; we also provide information and technology counsellors and design counsellors. We can help them to marry management skills and to identify sources of potential finance. The combination of business links with some of the initiatives that were mentioned will be an important way forward, and I shall monitor that carefully.
The idea of a royal academy of inventors is intriguing. I shall encourage people to work on the project and to discover how it might be financed and justified, because it will obviously need private and other support. I cannot influence the Millennium Commission and we should be cautious about that because the commission is independent. I would certainly give an application a fair wind.
There is no deliberate passing over of inventors in the honours list, but I shall certainly raise the issue again to see whether there is another way to provide objective recognition of the enormous work of people such as Trevor Baylis, which my hon. Friend has mentioned. I am going to South Africa shortly for the Group of Seven developing nations conference on the information

super-highway. I should like to take some of the details that my hon. Friend mentioned about production in South Africa of the clockwork radio.
We are doing important work to spread information through the developing world not only through that invention but by way of some remarkable happenings. The global digital mobile network was developed in this country and is now the global standard, and the remarkable use of satellites, through the very small aperture terminal systems, is rapidly bringing information to parts of the world where the people thought that they could not receive it because of the sheer cost of digging up parts of deserted areas to lay cables. Cable is no longer required to carry information technology.
I have mentioned interesting ideas that I have seen. In the recent Science, Engineering and Technology Week there was a demonstration of glass changing its molecular structure at the flick of a switch so that it becomes impossible to see through. That is not quite the invention that my hon. Friend the Member for Dover mentioned, but it is an example of the ways in which new technology is transforming the way in which we view a product. Glass is no longer glass in the sense that we just look through it or that it can be pretty or painted. We can now change its molecular structure, and such inventions will eventually affect our way of life.
I hope that British companies will give a good reception to UK-based inventors. I accept that, in that respect, the record is not perfect, but as I travel around the country I preach to people to look more at the innovative process. However, I do not want to underestimate the matter. I have met some inventors who think that the invention is it, a wonderful idea. But the inventor is only one part of the process, and I am not being cruel to the inventor when I say that.
One of our more interesting awards is the MacRobert award, which is funded by the DTI in conjunction with the Royal Academy of Engineering. The award is for innovation in engineering but also recognises the excellence in engineering which achieved the commercial success of the original idea. It is a combination award, and that is important because one of my objects is to raise the status of the engineer in our society. That is crucial, because, while an inventor can produce a good idea, it will be the engineer who will help it to become a commercially viable product.
The 1995 winner of the MacRobert award was British Gas research division and Gill Electronics for a new gas meter based on ultrasound. It is accurate to many decimal places and can be installed and left in place for 10 years. Mr. Gill told me that developing his invention, which is based on the ultrasound testing of gas flows, through British Gas research laboratories into a product that can be marketed worldwide was a complete eye-opener to him. He could not have done it without the resources of British Gas. I have seen other developments of that process.
British Steel is developing a new railway steel. That emerged from work on mathematical models in Cambridge, when, I believe, two years of work on mathematical models suddenly resulted in a breakthrough which British Steel is taking forward in conjunction with Cambridge university.

Mr. Sheerman: Will the Minister give way on that point?

Mr. Taylor: I am running short of time, so I shall not give way. [Interruption.]

Madam Deputy Speaker (Dame Janet Fookes): Order. It is clear that the Minister is not giving way.

Mr. Taylor: One of the key points in the debate related to management training, which is crucial. I am trying to enthuse the Engineering Council to bring management training into engineering courses so that more engineers can be competent managers. The same goes for many scientists because management is a key tool for the engineer or researcher or anyone else. I am glad to see that more universities are beginning to pick that up, because it will determine success.
From my discussions with the venture capital industry it seems that there is no shortage of money, but marrying a good idea to finance often requires other factors, most particularly management. In the DTI we are attempting to work with financiers and industry to find a way to encourage greater access to management skills for people with ideas so that the venture capital industry can have more confidence in evaluating a project and in trying to determine how it will become a commercial proposition for the industry. I hope that that process will yield results in the near future.
I shall deal briefly but determinedly with the comments about the decline in the science base. When I visit universities, I do not see any decline in that base. We could trade statistics across the Dispatch Box, but I can say that the amount spent on the science base by the Office of Science and Technology and by the higher education funding councils in terms of research is up in real terms by 10 per cent. over 10 years. However, I do not want to go into statistics or engage in trade-offs about Nobel prizes which often reflect research that has been carried out some time before such awards are made. However, I congratulate the chief scientific adviser on winning the prestigious Crafoord prize from Sweden only this week.
I do not wish to trade statistics on manufacturing, save to say that the prospects for manufacturing investment and for productivity and output are currently extremely good. We discussed that at a recent Question Time. Allowing for the various economic cycles, over the past 10 years productivity in the United Kingdom has been extremely good. I appreciate the point about capital funding. That is

why the higher education funding councils and I this year presented a targeted project for capital funding of £18 million of Government money which is reassigned specifically to equipment. With matched funding, that will amount to £36 million.
I am looking longer term at how we might overcome some of the difficulties of universities in funding capital equipment, which is vital for universities and for the quality of their research. I recognise that, and I do not intend to duck that issue, because it is important for us to realise that the quality of university research can often depend on fairly mundane pieces of equipment such as fume cupboards.
On its science and technology activities, the DTI will spend level cash of about £350 million over the next few years. Our figures have been distorted by factors such as the fast breeder and by launch-aid inputs. The Department is firmly behind the work of industry in innovation and application. It has a series of initiatives, some of which I have mentioned, such as the management in the 1990s programme, an area in which we wish to improve our activities and raise the standards of British companies.
Increasingly, I talk to universities about the way in which they can identify smaller companies, which can be difficult. The Faraday concepts are being examined by research councils, particularly by the Engineering and Physical Sciences Research Council. We are working with research and technology organisations and trying to get people to transfer from universities to companies because the skills-based transfer is important. The teaching companies scheme and the postgraduate training partnership are crucial. I have introduced a college-based scheme to ensure that we do not lose sight of the role that colleges and vocational qualification college students can play in companies in the areas in which they work. All that is themed to try to improve the competitive position of the United Kingdom in the vital fields of science, technology, innovation and inventiveness.
I pay tribute to my hon. Friend the Member for Dover for his work in highlighting the matter. I warmly endorse the work of inventors. I am trying to provide a successful framework for them and to stimulate British industry to realise that in the next century, we will succeed only by adding value and using our wits. It is not only a question of keeping our costs down but of trying to compete with the rest of world with better products, new ideas, better design and a way that leads us forward into the next century based on the competitiveness and creativity of industry in Britain. Inventors have a crucial role to play and I pay tribute to all those mentioned by my hon. Friend. If there is anything that I can do to stimulate them, I shall ask my officials to consider it closely.

British Council

11 am

Mr. Robert Litherland: I am delighted but saddened to have the opportunity to highlight the impact of the £22 million cut over the next three years on the British Council and its role as our principal agency for cultural relations abroad and in our aid programmes and diplomacy. The council's future has been undermined and jeopardised by the cuts. The Government know that full well, because the council has emphasised its difficulties in meeting the costs of restructuring to come to terms with the demands placed upon it by the swingeing cuts.
The council does not have access to capital to fund the restructuring that will be forced upon it to implement the cuts. It is a Catch-22 situation. The planned reduction in the British Council's grant and the enforced restructuring have not been thought through. It is another victim of ill-conceived Treasury policy and of what the Secretary of State described to me in his letter as
the recent very tough spending round which has reduced the Foreign and Commonwealth Office budget.
That is it in a nutshell. The council is a victim of public expenditure restraints, no matter how valued is its work. Dr. Roger Bowers, its Manchester assistant director general, informs me that its long-term commitment depends on whether there is any further significant change in the Government's financial support. My advice to him is not to hold his breath. We cannot rely on a Government that can impose such unexpected cuts without considering the effects on the service and especially on the efficient and dedicated staff. We cannot rely on a Secretary of State who, in a two-line sentence, informs me:
We will do our best to help the council next year but that must depend upon the outcome of the next spending round.
Those comments do not sound reassuring to me and I do not think that they will reassure management and staff.
I am assured by the British Council that it has a good efficiency record. It was on target to reduce its UK overheads and was restructuring its regional offices, producing savings and exceeding Treasury targets for efficiency savings. It had cut staff over three years by 25 per cent., so it had played its part. Regrettably, that could not satisfy a Government hellbent on cutting public expenditure. Where better to do that than with an organisation that, in spite of its excellent activities, is little known domestically?
The ordinary voter knows little or nothing of the work of the British Council. Such savage cuts would not be a vote loser. How many people realise that the British Council promotes British interests abroad through many and varied channels? How many know about its management of overseas development projects, its promotion of the English language, its vital partnership links or its involvement with education and training, science and technology and the promotion of British arts? How many know how that work has benefited millions over the past 60 years? So what? It is not a vote loser. Nobody on the domestic front will miss it, so who cares?
There are many who care and who are anxious to make their concern known. This debate has generated a great deal of interest in what is happening to the British Council and where its future lies. I know that other right hon. and

hon. Members wish to speak who have taken a long-term interest in its activities and followed recent events with great concern. They are far more knowledgeable than I about the details of its crucial role in world affairs.
I regret that other interested Members such as me were not contacted earlier. Neither I, as Member for Manchester, Central where the council is sited, nor my hon. Friend the Member for Stretford (Mr. Lloyd) who represents the adjoining constituency and who is a Front-Bench spokesperson on foreign affairs, were aware of the extreme difficulties facing the council until a few short weeks ago when we received a two-sided A4 sheet from the Public Services, Tax and Commerce Union.
Several hon. Members were disturbed by the lack of communication between the British Council and Back-Bench Members. There appears to have been an air of secrecy and a softly, softly approach to its impending doom. Do not rock the boat; be nice to the Government—as if that course of action would make any difference. It was not until my hon. Friend the Member for Dundee, West (Mr. Ross), in his role as chair of the parliamentary Labour party foreign affairs departmental committee, invited officers such as the council's director general, Sir John Hanson, and Dr. Roger Bowers to our meeting that we realised its predicament. That meeting took place only four or five weeks ago. The cuts will damage the work of council in general but will have a detrimental effect on Manchester in particular.
On hearing of the fate of Manchester, my mind went back to a lovely summer's day in July 1992. Manchester was agog and there was an air of excitement and eager anticipation. Her Majesty the Queen was visiting the city. The crowds and the children turned out to offer the usual warm Manchester welcome. The Queen was there for a dual purpose. She had come to open the prestigious new British Council building to which its headquarters had relocated. She followed that opening ceremony by declaring the new metrolink tramway open. It was a day of achievement for the city and its citizens. The metrolink is still running; it has proved to be a huge success. However, the same cannot be said for the British Council, for what a sad, sorry story that has turned out to be.
Who would have thought that, only four short years from that July day in 1992, the British Council would face such a situation? It is four years since Her Majesty paid tribute to the building's architectural merit and admired the internal decoration, the new carpets and the unique wall-mounted clock. It is three years since it won the office of the year award, but that building will no longer serve the purpose for which it was intended. The building was a vital part of the jigsaw of our regeneration programme and the British Council's coming to Manchester was part of the process of urban development that we were trying to achieve. What we had envisaged as a success story is now in a state of collapse. After the depletion of our manufacturing base, we welcomed the new service industries that brought jobs to Manchester. Where do we go now?
It does not take a genius to work out that enforced redundancies—about 180 people are to lose their jobs in the current financial year—and staff being moved elsewhere means that the British Council will have to seek alternative accommodation. I am informed that it is exploring all options for possible new tenants and a new home for itself. Although we hear the mutterings of management, who say that they are committed to staying


in Manchester, I am sceptical of what they really mean—the city of Manchester or Greater Manchester. A new venue of Salford quays has been mooted, but Salford is a neighbouring authority. The British Council would be moving away from the city itself if it takes that decision.
I appreciate that the management are expressing regret that the reductions are taking place so soon after the official opening, especially when the council's work is most needed, but it is the staff of the British Council who concern me.
I recently received a letter from an employee, who told me that, as the letter was being written, the family were still in the throes of upheaval after relocation and were surrounded by cardboard boxes waiting to be unpacked. The family had faced the trauma of upheaval in leaving their home down south to move to Manchester, where the spouse had acquired a part-time job. The children had been placed in a new school, made new friends, and the family had made a new life. They informed me that they liked their environment and did not want to move on. Yet they could find themselves left high and dry without a livelihood, far from their relatives and friends who remain in the south of England. The Secretary of State has an obligation to offer a full explanation to such people of how they will be assisted and compensated for such loss.
The worry is that the cost of restructuring will be extremely high. The estimated cost of redundancies, based on previous redundancy programmes, is in the region of £12.6 million. With additional costs, a total restructuring cost of £17 million is estimated. If the Government will not meet those costs, will the council face insolvency? The council emphasises that it has no means of funding such costs unless it does not carry out its operational work for at least a year. Can anybody imagine that? It would seriously discredit the Government, their foreign policy and this country.
Where do the staff stand in such a scenario? Close to £15 million was spent on relocation, and a plan to save costs by going to Manchester was devised. What happened to all those carefully thought-out schemes? Why did the Foreign and Commonwealth Office allow the British Council to go ahead with its decision to restructure when it must have been aware that the Treasury intended to impose such draconian cuts? It must have known the effects that such cuts would have on the council's operations and staff.
The council is in an impossible position. There is no scope for savings of such magnitude. How can it maintain its present global coverage under such demanding financial guidelines? The short answer is that it cannot. The scale of cuts has crippled the organisation and there are grave doubts that it can carry on and meet the stated objectives of Britain's foreign policy for the 21st century. It is ironic that the 1992 Conservative party manifesto said:
The British Council acts as a cultural ambassador for Britain and for the English language—We will promote the English language by strengthening both the British Council and the BBC World Service".
Strengthen indeed! The Government should tell that to the family surrounded by unpacked cardboard boxes and with no future to look forward to.
If it is the intention to save the British Council's frontline operations at the expense of UK operations—the management are looking for a £5.5 million reduction in

the UK—we can expect more families to meet the same fate of the family that I have described. What a peculiar way to treat staff of an organisation that has fulfilled all its obligations and has been described by the Secretary of State as dedicated and one that has made an outstanding contribution. I am always cynical of the Government. Perhaps their aim is to undermine the viability of the British Council and make room for the private sector, which we know is watching events with interest and would quickly cream off the most lucrative commercial operations if it were allowed.
I picked up two articles on the subject recently. A letter in The Economist said:
The most drastic solution would be to privatise the council's commercial activities and restrict it to promoting the interests of all British providers of such services.
The Times Higher Educational Supplement said:
What the Government refuses to accept is that this structure undermines its stated belief in market forces, the private sector and the discipline of competition.
My, my, the private sector is now telling the Government their obligations to the private sector.
I was delighted that Sir John Hanson, the council's director general, dismissed the complaints. He was reported as pointing out:
the council still farms out many of the contracts it wins to other British suppliers, rather than doing the work itself. But he believes British firms would not win so much work if the council did not run its own language schools and consultancy projects, as showcases for Britain's skills.
As we all know, privatisation has always been the Government's panacea to all the country's ills. They would forsake all for their ideology. I sincerely hope that in this special case, the Government will have a serious rethink. The British Council, its staff and Manchester deserve better.

Mr. Tim Renton: I congratulate the hon. Member for Manchester, Central (Mr. Litherland) on securing this Adjournment debate on the British Council. I share many of his concerns about the British Council. He has represented a Manchester constituency over the years, so I appreciate his strength of feeling on behalf of British Council employees in Manchester, which he so vividly expressed.
I do not at all agree with the hon. Member that the British Council is—I think that I am quoting him correctly—in "a state of collapse". I do agree, however, that there is very widespread concern at all levels in the council about precisely where its future will be. I state that as an unpaid vice-chairman of the British Council—an interest that has regularly been declared in the Register of Members' Interests. I have had the honour and good fortune to hold that post for nearly four years, and during that time, two themes have dominated our board meetings and all the contacts that I have had with British Council staff in London, Manchester and abroad.
The first theme is simply the relentless pursuit of better housekeeping, through greater cost-effectiveness, more modern accounting and a better use of information technology. The move from London to Manchester was one aspect of that, and was intended to save substantially on salaries and associated expenses in the United Kingdom.
The hon. Member for Manchester, Central has stated that there has been a substantial reduction in UK staff in the past four years, before any consideration is made of the effect of the new grant in aid proposals. We have recently sold or let half the headquarters building near Trafalgar square to bring United Kingdom costs down.
The other—and more positive and exciting—side of our affairs has been the careful expansion of British Council posts in, for example, eastern Europe and the former Soviet Union, and the re-opening of posts in Shanghai and Beijing. These can help us take advantage—usually on a fee-earning basis—of the enormous opportunities for all aspects of English language teaching, training and technical co-operation in the contracts that are now available to the British Council, often on a competitive basis. We must fight to provide ELT services against competition from Australia and the USA, and we must fight to win technical co-operation contracts with the Overseas Development Administration, the World bank and the European bank of reconstruction and development.
In the past three or four years, I have heard the British Council praised and encouraged by the Prince of Wales, the Prime Minister, successive Foreign Secretaries and countless ambassadors, both abroad and at home in London. It is worth pausing to think that, on a rough calculation, there are something like 1 billion people in the world at the moment who want to learn English. English is now by far and away Britain's most valuable export. It is the universal second language, the language of computer-speak and the language that almost all professionals use in discussing technicalities through the Internet. To the chagrin of the French, English is now the language of diplomacy. In a euphoric mood, I could say that every one of those billion people—or their teachers—is in some way a potential client of the British Council.
I am delighted to add that the revenue earned by the British Council from its activities is increasing. The amount was £62 million in 1990–91 and increased to £115 million in 1994–95. It is estimated to increase further to £130 million in the year that has just ended.
I wish to refer for a moment to China. I visited the British Council's offices in Shanghai and Beijing after going to Hong Kong in October. No one can go there and not be amazed at the potential for opportunity. After all, it is a country with 1.2 billion people, and its GNP is growing at a rate of 10 to 12 per cent. a year. It has more than 1,000 universities. English is now the official second language for everyone aged nine upwards until they finish their education. That is against the background of the fact that more than 90 per cent. of students do not have any English language teachers because they do not exist. The scope for an organisation like the British Council to team up with the Chinese open university, the BBC or David Puttnam to provide distance learning in English and to train and teach people up to the professional standard for English teaching is absolutely huge.
Even if some of the British Council's activities become fee-earning, they need seedcorn capital to get started. As the hon. Member for Manchester, Central said, the British Council's activities are often not recognised in this country because we do not trumpet them around the United Kingdom enough. The council is helping to win for Britain its present market share in the global education and training export business. This is estimated by the Department of Trade and Industry—not by the council—

to be worth some £7 billion a year. The council's education and counselling service operates in 10 key markets in the far east and, through our education fares, exhibitions and face-to-face advice to students, the service is contributing to increasing the number of overseas students in Britain to beyond the level it was when full costs for fees were introduced. I simply do not believe that that would have happened without the British Council.
The council is involved not only in higher education, but in the promotion of United Kingdom education at all levels. I attended an education seminar over lunch in the Jubilee Room on Monday, which was aimed by schools, universities and colleges of technology in Sussex at overseas students. Without my proclaiming that I was the vice-chairman of the British Council, strong credit at that meeting was given to the council for its work.
My right hon. Friend the Minister is well aware that the council's overseas offices depend for their viability on a fixed bunch of activities. It is not possible to say to any of them that they should concentrate on revenue-earning activities because such activities are not yet of a sufficient size to enable the posts abroad to be viable and to justify themselves. Such a demand would totally ignore the original aims of the British Council—the promoting of British art, culture, books and music abroad. The other side of our activities brings in a good many people into our posts, but the availability of libraries and information centres about Britain and the sponsoring of art and culture tours abroad are not necessarily financially viable.
Continued grant in aid is necessary to keep the whole plethora of council activities going. Without grant in aid, many British Council overseas posts will simply have to close, as they will be unable to expand their revenue activities quickly enough. Against that background, I find it hard to believe that the Government will wish to force the British Council—that jewel in the crown for marketing Britain abroad—will wish to force us into the closure of libraries or overseas posts. I must say, however, that the present forecast for grant in aid for the British Council would have exactly that effect.
The sums needed to prevent this are not large. The British Council would certainly need assistance with the cost of redundancies at home in which we are now bound to be involved. Beyond that, we have spoken of the restoration of some £5 million grant in aid in 1997–98, and £10 million each year thereafter to avoid the closure of posts. Frankly, that would run wholly contrary to the Government's policy of support for the British Council and the better presentation and marketing of contemporary Britain, its education, IT and modern technology abroad in which the British Council excels
I know that the board, senior management and staff of the British Council very much hope to hear some good news from my right hon. Friend the Minister—if not today, then next week. Many important people have told me recently in relation to the British Council that they are on our side—they are with the angels on this. That is very nice, but frankly being with the angels at the moment is not enough. They will have to have clutched between their wings some rehabilitation and improvement of our grant in aid if we are to avoid the closure of overseas posts, libraries and information centres. Everyone in the House would greatly regret that.

Several hon. Members: rose—

Madam Deputy Speaker (Dame Janet Fookes): Order. There is clearly great interest in the debate, so I hope that in the short time remaining those hon. Members who wish to speak will make their contributions as brief as possible.

Mr. Tam Dalyell: I shall be brief.
The British Council is central, not peripheral, to the orientation of Britain's foreign policy. It is not on the margin. Therefore, I simply ask: what is the Government's thinking on the British Council's position in the resources queue?
The right hon. Member for Mid-Sussex (Mr. Renton) has just reminded us that the British Council is a significant earner. The figure that we have been given, as he will know from the board, is £130 million. That could go up and up over a period of years for the very reasons that he has given. There is a huge market for educational training, and the British Council has a key role in the British economy.
I take just one example. I was lucky enough to be selected for the recent Inter-Parliamentary Union delegation to Nepal, which was led by the Secretary of State for Northern Ireland. The right hon. and learned Gentleman and I went to see the Minister for Overseas Development about the British Council in Kathmandu and how possible cuts might affect it. I can only say, without being maudlin, that it was a moving experience to see people from Nepal who, frankly, have no other decent library, streaming into the offices of that well and imaginatively run British Council post in order to enlarge their knowledge.
Doubtless colleagues could repeat such experiences from many parts of the world; I can talk only about that recent experience. To see the amount of service that was being given to that country, one of the poorest countries in the world on any index, really did make one feel rather proud to be British. Of course, a great deal more could be done. Certainly in Nepal, more could be done by distance learning in areas where, because of the terrain, it is difficult to get children to any kind of central primary school. The possibilities of distance learning there are immense, and the British Council is the body to do that.
Therefore, if we are to talk meaningfully about overseas aid and the help that we give to developing countries, the British Council and its capacities and skills in areas such as distance learning are of enormous importance.
You, Madam Deputy Speaker, asked us to be brief and we want to hear the Minister, so I end with these two questions. Where is the British Council in the resourcing queue? Do the Government take the view, as many of us do, that it is not only morally right in many countries to support the British Council. but in the British national interest? I shall leave it at that.

Sir Jim Lester: It is a delight to follow the hon. Member for Linlithgow (Mr. Dalyell). I agree with every word that he has just said.
I recognise that the public in general do not know about the British Council. But I speak as a member of the Select Committee on Foreign Affairs since 1982–14 years' experience of looking at the British Council as part of

the Select Committee's responsibility to consider foreign policy. That is why I want to speak today, and I just want to say three things.
First, the credit for the figures that I am about to quote rests with my hon. Friend the Member for Carshalton and Wallington (Mr. Forman) in his Macleod essay entitled "No Hiding Place: British economic policy in the modern world". That is the context in which things should be placed.
Britain consistently punches above its weight. The figures in the essay show that Britain has only 1 per cent. of the world's population, but 3.5 per cent. of its gross domestic product. Since 1979, Britain's overall international trading position has changed from 20 per cent. for exports and 27 per cent. for imports in 1979 to 23 per cent. for exports and 25 per cent. for imports in 1994. Our exports of goods and services at constant 1990 prices have risen from 22 per cent. of GDP in 1979 to 27 per cent. in 1994. Those are critical figures in terms of Britain's economic place in a new world with a global economy, and they are good figures.
We know that, diplomatically and politically, we punch above our weight. Britain is a tiny country, which is a member of the Commonwealth, the United Nations Security Council and all the rest. I shall not rehearse the details because I think that we all accept that; Britain punches above its weight, economically, politically and diplomatically. Part of the reason for that is that, in the years since 1979, the Foreign Office has targeted the improvement of its performance.
The Select Committee is now committed to producing a report on cultural diplomacy and it has shown that that plays a vital part in Britain's export efforts and capacity to work in the world. The term "cultural diplomacy" had not been thought of before the Select Committee considered it, but the two essential elements of cultural diplomacy are the BBC World Service and the British Council. The Select Committee's most recent report on the future of the Commonwealth comes back again to that question and gives tremendous support to the British Council and the role that it plays.
We are a member of the European Union, with an economic base that enables us, through the Commonwealth and the rest of the world, to look ahead to a prosperous future. I come here to the point made by the hon. Member for Linlithgow, which is the second thing that I wanted to say. Obviously, British policy must be to expand and to continue to punch above our weight in the world, but on what basis should we evaluate the things that are vital in terms of achieving that objective? The Government have no way of determining whether something is a real benefit that should be backed and on which extra money should be spent because it is good.
The English language, as my right hon. Friend the Member for Mid-Sussex (Mr. Renton) has just suggested. is one of those things, as is the British Council. The Foreign Office comes into the same category. I wish that we had a Treasury Minister on the Front Bench rather than my right hon. Friend the Minister of State, because for the Foreign Office, which does such magnificent work overseas, to be spending less than 1 per cent. of our gross public expenditure and achieving so much for it, yet to be subject to regular miserable chippy-chippy cuts that result in what has happened to the British Council, is absolutely crazy. By spending very little money. we could achieve even better figures than those that 1 have put forward.
I work closely with my old university, and my right hon. Friend the Member for Mid-Sussex mentioned education. Britain attracts 250,000 students at a value of about £2 billion to our economy through the joint operation of universities and the British Council. The Americans, with their great country, attract only 450,000. Again, we punch above our weight and we are attractive because of our language and standards and because of the high regard in which people hold what Britain has to offer.
We must have a system of government that evaluates the purpose and the value to Britain of the British Council's budget and, therefore, backs winners rather than chopping things that clearly have an enormous benefit, particularly when we are talking about piddling amounts of money. Bovine spongiform encephalopathy is serious and suddenly a lot of money has been found for the farmers. The British Council needs only a fraction of that.
My third point concerns the way in which things are done. Great institutions such as the British Council cannot suddenly make reductions in their costs without facing what I call double jeopardy. People have to be made redundant, so the cost of redundancy must be added to the amount of money that has to be found. That is double jeopardy because money is being wasted in order to get rid of people, particularly people overseas who have often been devoted servants of Britain, working for the British Council. They require some notice in their own interests, because they have no fallback in terms of social security in many of the countries in which they work. That operation has been very badly handled, and leaves the British Council in limbo because of double jeopardy.
The hon. Member for Manchester, Central (Mr. Litherland) suggested that people do not know much about the British Council. Last Wednesday, the Foreign Affairs Select Committee had before it Sir Martin Jacomb and Sir John Hanson to press all those points. The hearing was televised, although I suspect that it was not shown on any television channels. Nevertheless, the transcript of that meeting is available.
I should like to quote from the hearing a question—naturally from me—in which I said that the council was strongly backed by the members of the Committee. As my right hon. Friend the Member for Mid-Sussex said, we had been talking to the right people and received warm words and suggestions that action might be taken. I asked Sir Martin:
Are they really taking your concerns seriously? Can you give us some idea of the timescale in which you would want an assurance on which you can work before you actually have to take the sort of decisions, which you are obviously working on, which you feel would be very damaging to your future?
Sir Martin replied:
The fact is we are already really in extra time. We have been talking about this since last November, which is nearly five months, and still there is no assurance of money. If there is to be no alleviation and we have to make reductions, particularly reductions abroad, to handle that sensibly and sensitively and in such a way as to secure the minimum damage to this country, action has to be taken now.
That is a very profound statement from someone who has devotedly worked with the British Council.
The impact of the cuts is completely out of proportion to the amount of money that we are talking about. I beg my right hon. Friend the Minister, and any other right

hon. Friend who can help, to grasp the nettle, turn round the situation and give a positive assurance—which has money at the end of it—to bring this unfortunate saga to an end.

Miss Emma Nicholson: I congratulate the hon. Member for Manchester, Central (Mr. Litherland) on ensuring that this important subject is being debated at all. It is a pleasure to follow the hon. Member for Linlithgow (Mr. Dalyell) and to listen to the vice-chairman of the British Council, the right hon. Member for Mid-Sussex (Mr. Renton), who said that he was speaking with some euphoria when he reeled off credit upon credit for the British Council.
All of us could list the council's credits, because it is a most remarkable organisation—but the right hon. Member for Mid-Sussex perhaps ducked the issue at the end of his speech. Surely he cannot be in favour of the disastrous—or near-disastrous—cuts to the British Council, because a 16 per cent. cut in real terms will surely most seriously threaten its capacity to maintain an effective presence internationally and its programme in regions that are important to British interests.
The council operates in 109 countries, and, as we all know, it is currently the only Government organisation that sustains and promotes British culture. We know that the British Government will not rejoin the United Nations Educational, Scientific and Cultural Organisation, so we must rely for the promotion of the English language and British culture wholly on the British Council.
I am unclear why the Government wish to impose on the British Council this serious public expenditure cut of 16 per cent. in real terms. Surely we are correct in saying today, as the vice-chairman has already said, that there has been immense praise for the British Council, even from a former Foreign Secretary and from the current Foreign Secretary.
In his letter about the cuts to the council's chairman, the Foreign Secretary stated that the reductions did not mean that he did not appreciate
the outstanding contribution
that the council
makes to the UK's overall diplomatic effort.
He also acknowledged that the council had
done a great deal to improve efficiency by rationalising its UK network and reducing overheads",
and that the council was
extremely leanly staffed.
The Foreign Secretary went on to ask again for the impossible. He said that he nevertheless hoped that it would be possible for the council
to continue to maintain a global network and to avoid significant post closures.
Of course, those two objectives just do not match up.
I understand that the council has only one way in which to meet the new grant in aid regulations, which will be a significant reduction in its staffing levels, with higher proportions of cuts in the UK. The saddest aspect of those cuts is that the British Council is a people-led organisation. How can we imagine that the skills of those whom the British Council will be forced to shed are replaceable in the short term? We know that it takes a


lifetime to learn the language and culture of a country. It is a lifetime skill. I believe that British Council staff have been vastly underrated by the Government, and I am sad that those magnificent and skilled people will be lost in helping to implement British Government policies.
Hon. Members have, of course, already mentioned the possibility of private investment. The council does not have the means or access to the means to pay for investment, so private funding has been suggested. But if we examine the closure of the BBC's Arabic service, we immediately notice that private funding on the international diplomatic scene brings significant and heavy political and diplomatic costs. The Government's mishandling of the unfortunate al-Masari case has led to the direct closure of the BBC Arabic service, which was surely a private investment in a Government effort.
My questions on the BBC Rwanda service have still not been answered by the Foreign Secretary. We again notice immediately that that service might go because of the private investment that is keeping that service alive. Therefore, I suggest that to look for private funding to fund the British Government's policy internationally is a very shortsighted and ultimately foolish way in which to try to fill the gap, to replace the funds that the Government have mislaid somewhere. I am tempted to say, and believe, that the Government are asking the British Council to cut its cultural coat—which is Britain's cultural coat—to fit the Conservative party's shaggy cloth.
I also suggest that the pre-eminence of the English language internationally may have come about more because of the fact that English is the language of the computer industry and of the air traffic control industry. Mere communication by a language in the modern world does not mean that culture will come with it. English language culture—the civilisation of Shakespeare—is daily diminishing because of our absence from UNESCO. When we speak of the British Council, we speak no longer about its excellent underlying work in teaching the English language, but about the loss of the English, Scottish, northern Irish and Welsh cultures internationally.
The 1992 Conservative party manifesto, for the present Parliament, stated:
the British Council acts as a cultural ambassador for Britain and for the English language…We will promote the English language by strengthening both the British Council and the BBC World Service.
I was deeply saddened when I realised that that was not a valid statement of the policy being implemented. The reverse of that statement has happened with the BBC World Service, and the reverse is now happening with the British Council.
I should like to talk about the great difficulties in restructuring the British Council, which has been restructured and moved to Manchester—hence the initiator of this excellent debate. That restructuring was surely designed to make a leaner, meaner British Council to act into the millennium and beyond. Of course it is necessary—if the council is to protect its front-line operations, as the Secretary of State demanded in his statement to the House of Commons on 29 November—that the reductions come from savings in the United Kingdom. By 31 March next year, 350 posts will go,

and those job losses will cost £36,000 per person. The Government, in their dying throes, are forcing an expensive game upon the British Council.
As the hon. Member for Linlithgow has already asked, why do not the Government allow the council's revenue-earning activities to finance its continuing development and perhaps even its enlargement? There is no subsidy for the activities of the enterprises from the grant in aid. Those areas of work have to build their own reserves in order to provide for capital investment and cover commercial risk. If they do not do that, they will not grow and will ultimately fail. The added loss of impact for Britain overseas will be large because the British Council operates in markets or parts of markets that might not be commercially viable for other United Kingdom service providers, as the vice-chairman has already pointed out.
How is the British Council to find cash savings of the magnitude required from internal efficiency and reorganisation? It cannot. There is no way open for it other than by losing important, valuable, highly trained and skilful people.
The consequences for us all are real. It is open to any of us to go to see the British Council's work in Russia or in any part of the world and to be overwhelmed, as the hon. Member for Linlithgow said, by its efficiency and care. I believe that it is even more important than that. The British Council has built up expertise and experience over many years and these cuts are at odds with the objectives of Britain's global foreign policy today.

Mr. Mike Watson: This is one of the rare occasions when hon. Members on both sides of the Chamber seem to be singing more or less from the same song sheet. I hope that, because of the pressure exerted from both sides, when the Minister responds he will have something positive to say about the future funding of the British Council. I should like to put to him a quotation from his colleague the Foreign Secretary, in answer to a question from the hon. Member for Broxtowe (Sir J. Lester). He said:
We have protected the operating costs of…the British Council from the economies that are being made elsewhere in the public sector. I entirely endorse the objective that my hon. Friend has stated.
That was about improving Britain's influence in the world through trade flows.
If we did not take the same view, we would have subjected the operating costs of the…British Council to cuts. We have not done so. That is an indication of our good faith."—[Official Report, 29 November 1995; Vol. 267, c. 1189.]
If that is good faith, I would not like to encounter him in a bad mood.
We have heard a litany about the projected cuts and the effect that they are likely to have if they are not reversed. I am concerned particularly about the prospect of a reduction in the British Council's influence in a number of countries in various parts of the world. The hon. Member for Broxtowe quoted from the transcript of last week's hearing of the Select Committee on Foreign Affairs. At that meeting, the director-general, Sir John Hanson, suggested that it was likely that there would have to be a pull-out from 27 major cities and 16 countries, seven of which would be Commonwealth countries.
I must ask the Minister whether the Government are prepared to tolerate that. If they are prepared to see withdrawals from certain countries and closures in certain major cities, will he name the cities and countries that he thinks are dispensable? If he does not, he will put an intolerable burden on the British Council, not just in terms of the work that it has done in the past, the contacts that it has made and the vacuum that would be left behind, but in trying to choose one against another. It is an impossible task and it is one that it should not be facing. It is incumbent on the Government to take some of that responsibility and on the Minister to tell us whether he feels that it is acceptable for such closures to be made.
Some hon. Members have mentioned the fact that the British Council is far better known overseas than in this country. That is true. Perhaps the debate and the coverage that it has received—there is a comment in The Daily Telegraph today—will help the council's image with the public.
I am concerned about the British Council's work in respect of international students in the United Kingdom. My constituency contains two universities, and I was at a meeting as recently as yesterday dealing with cuts in education. As we all know, those cuts are across the board and are aimed at fattening the calf—if that is not too topical a reference—for the tax cuts that it is hoped will help the Conservatives at least to hide some of their embarrassment at the general election. It will be futile, and it is a shame that organisations such as the British Council and universities have to bear the brunt of that political axe.
Both the universities in my constituency, Glasgow-Caledonian and Strathclyde, have international students. The British Council's role in influencing the number of students who come to this country should not be underestimated. The number doubled between 1984 and 1994, and with universities being so strapped for cash, they desperately need the full-cost funding brought by international students. If there is to be a reduction in numbers—there might well be as a result of a reduction in the British Council's influence and in its education counselling service—it could have a knock-on effect in the United Kingdom, quite separate from the British Council's situation. That must be borne in mind. I realise that that is not directly part of the Minister's remit, but I hope that he will comment on it.
There are 28 British Council offices in the United Kingdom, and a number of them could face closure. How will it help the British Council to improve its image with the British public if it has to withdraw from areas in which it already has a presence? It needs to be better known in this country and needs more outlets if it is to do its job that much better.
My hon. Friend the Member for Manchester, Central (Mr. Litherland), whom I congratulate on obtaining the debate and on the content of his speech, made it clear what the closures could mean for jobs. If the jobs go, there will be a knock-on effect on the way in which the British Council operates overseas. That is the base from which many of its activities are resourced, and if that base is cut, it will seriously affect its operations.
I am concerned at the extent to which the cuts imposed on the British Council have been disproportionate to the cuts announced in respect of the Foreign and Commonwealth Office. If there are to be cuts across the

board, every Department must take its share. However, within that, it is unfair that an organisation as vulnerable as the British Council has been forced to take a disproportionate cut of 16 per cent., if one takes its Overseas Development Administration and diplomatic wing funding together. That is double the cut in the FCO as a whole. Can the Minister justify such a swingeing and unfair cut?
My hon. Friend the Member for Manchester, Central talked about the British Council's approach to dealing with the cuts since they were first announced some five months ago. It has been a softly-softly approach, quite different from that of the BBC World Service. It is up to the British Council to decide what tactics are best suited to it and, at the end of the day, their effectiveness should be the deciding factor.
Sadly, it seems that the softly-softly approach has not been effective. There is clear evidence of that in what I suspect the Minister will say today—although I remain optimistic—and in the views of the British Council's chairman. He seems finally to have lost faith in any approaches that he could make behind the scenes or in any ears in which he could whisper in the corridors that he treads.
It is strange that Sir Martin Jacomb has been placed in a position in which he has to be so trenchant in his criticism of the Government in general and the Foreign Secretary in particular. I have no doubt that he feels uncomfortable with that. He has talked about being strung along with assurances and of promises remaining unfulfilled to such an extent that he has now said that he is disappointed and filled with despondency. He is no icon of new Labour with a background of Eton, Oxford, Prudential and the Bank of England and all the other badges of honour that come from the corridors of power in this country. However, he has made that criticism.
It is shameful that the Government should treat people in that way, regardless of the organisation involved. There are means of arm twisting and negotiation to reach the end that one wants. Clearly, there is a feeling that the British Council has been let down. Everybody who knows the organisation, here and abroad, feels that if the cuts go ahead, the organisation will be severely undermined in an unfair and unwarranted way. I hope that the Minister will bear those comments in mind, as well as those from hon. Members on both sides of the House.
There is a great deal of good will towards the organisation. It wants to continue and even to expand the work that it is doing. It will be strangled in a number of areas in the world if the cuts go through. I urge the Minister in his response to tell us that there will be some alleviation of the cuts announced in November last year.

Ms Joyce Quin: I warmly congratulate my hon. Friend the Member for Manchester, Central (Mr. Litherland) on initiating the debate, and on the way in which he introduced it. I am not surprised by the strength of feeling that he showed in his speech—indeed, that strength of feeling has been widely shared by all hon. Members who have spoken. This has been a cross-party debate in terms of support for the work of the British Council and the deep concern about the effects that the cuts will have on it.
I know that this concern is widely shared by hon. Members who have not been able to speak in the debate. For example, my hon. Friend the Member for Stretford


(Mr. Lloyd) also speaks on foreign affairs from the Front Bench. His constituency adjoins that of my hon. Friend the Member for Manchester, Central. As a Front-Bench spokesman, he knows—as I do—the effect that these cuts will have on areas of the world for which we have responsibility in our Front-Bench roles.
My hon. Friend the Member for Manchester, Central spoke eloquently about the fact that the British Council was relocated to Manchester only four years ago. However, it is now facing major upheaval: there will be a dramatic loss of jobs and the office will be vacated—it took possession of the office so proudly only four years ago. The office was named 1993 office of the year. Despite that, the British Council is being forced to find smaller premises.
We also know that 1992 was the year of the general election, and the year in which the Conservative party put in its election manifesto its commitment to a strengthened British Council and a strengthened BBC World Service—that has been referred to by several hon. Members. Until now, this has been a less well publicised broken promise of the Conservative Government. The Labour party intends to continue to draw attention to this issue.
My hon. Friend the Member for Manchester, Central recognised that the British Council has an impact far wider than Manchester and his constituency—that it is of worldwide significance, that it is an important part of Britain's role and image in the world, and that its work brings substantial economic, trading and other short-term and long-term benefits to this country that are difficult to calculate but are evident.
It has been said that the villain of the piece is the Treasury, in forcing these cuts on the Foreign and Commonwealth Office. While I do not dissent from that, it seems to me that the Foreign and Commonwealth Office has achieved particularly poor performance in defending those parts of its budget that are particularly useful, such as the British Council and the BBC World Service. The Minister will remember the strength of feeling in the debate on the BBC World Service earlier this Session.
The hon. Member for Torridge and West Devon (Miss Nicholson) referred to the position of the BBC World Service Television in Arabic. A few days ago, I asked the Minister a question in this regard. He replied:
Decisions about any future developments are a matter for BBC Worldwide Television."—[Official Report, 29 April 1996; Vol. 276, c. 358.]
In other words, the Minister has washed his hands of the future of the BBC Arabic service, which is unacceptable, given the Government's responsibility for the budget of the BBC World Service and the concern about the future of the Arabic service and the BBC World Service in general.
As my hon. Friend the Member for Glasgow, Central (Mr. Watson) and other hon. Members have said, the British Council has tried to be reasonable in its approach to the Government in the face of the huge problems it is encountering. The enormity of what is happening is only just starting to strike home, because it has not received the publicity that has been given to other issues. As a result of this debate, the Government can be in no doubt that there is great concern about this issue. Now that publicity has been given to the problem, we will not be satisfied until some proper action has been taken.
It is important to stress that we are talking about cuts on top of cuts—that is what is making the situation so difficult for the council. It was hard enough to manage the cuts that were already in train, but the practical and economic consequences of cuts on cuts will make the problems catastrophic.
The British Council contests the figures that the Government gave in the narrative report accompanying the expenditure of the Foreign and Commonwealth Office. It has said that the report ignores the effect of cuts announced in the 1994 public expenditure round—cuts that take effect during the current survey period. The British Council has to face cuts of 16 per cent., rather than the 8 per cent. that the Foreign and Commonwealth Office is facing as a whole. I should like the Minister to comment on that.
This morning, hon. Members have given examples of the ways in which these cuts will affect the services of the British Council—they may even result in some closures. The British Council also gave examples in its evidence to the Foreign Affairs Select Committee. They seemed to me, and to other hon. Members, very alarming indeed.
For example, cutting services in central and eastern Europe seems to be a crazy and short-sighted decision when those countries are going through such a difficult transition period and need help, support and advice on a huge scale from western Europe and other parts of the world. It is particularly short-sighted if we are really interested in establishing long-term, good economic and political relationships with those countries. North Africa has also been mentioned. My hon. Friend the Member for Linlithgow (Mr. Dalyell) referred to Nepal and to some of the work that the British Council does in the poorest countries.
What is the Minister going to tell us this morning? Is he going to say where he is prepared to see those cuts? He should not evade his responsibility. As he has put the British Council in this situation, he has to be open with hon. Members and say where he expects those cuts and closures to take place, and what problems will be created as a result.
The debate has shown that hon. Members who have spoken are familiar with, and appreciative and supportive of, the work of the British Council. I have participated in some of the conferences organised by the British Council, in particular a recent conference in Oxford that brought together participants from the European Union and from central and eastern Europe. That event was most worth while. I know that the contacts that are made in such forums are likely to have long-lasting and positive effects.
Today, hon. Members have referred to the cuts that the British Council is being forced to make, and have said that they are short-sighted and, in many ways, self-defeating. The value of the council's work is tremendous. The spin-off of its work is terribly important in terms of the British economy and good relationships with other countries.
I have had interesting contacts with the British Council in Japan, and I know that the work done in that office is of dramatic value to the United Kingdom economy. An example was given where the arts section of its budget—which is about £500, 000 a year—helped to promote activity that was estimated to be worth £50 million. The figures provided by the British Council and some of the


activities that it has promoted show a 10:1 return on investment—sometimes the investment is modest, but it has enormous economic spin-offs.
We are also very worried about the costs of closures. The BBC World Service has made that point effectively, especially in its evidence to the Foreign Affairs Select Committee. For example, the closure of the French service was estimated to cost £300 million, even though the overall cost saved was only £400 million, so one had to spend a tremendous amount simply to make such a closure. The British Council is especially worried about the cost of redundancies that will be caused by the loss of jobs resulting from the cuts.
I ask the Minister to give a specific commitment to give the British Council help with those redundancy costs. One of the problems that are especially acute at present, as the hon. Member for Broxtowe (Sir J. Lester) said, is that, if a decision to give some help with redundancies is not taken in the next few weeks, it will mean accelerated closures in some of the council's overseas operations—and the Minister must realise that no one who has spoken in the debate wants that.
The British Council is being put in an impossible position because it is required to live within the new rules, the new cuts, without adequate means of getting there. That is a real problem, which demands urgent negotiations with the Government and with the Minister. Perhaps the Minister will give us a commitment to hold urgent negotiations and discussions with the British Council.
I should like the Minister to give us an assurance that the cuts that we know affect the Overseas Development Administration, and which in turn affect the British Council, can be mitigated, so that the work of the ODA and of the British Council does not suffer disproportionately as a result of the contractual relationship between them to provide specific services.
Interestingly, in the public session that the Foreign Affairs Select Committee held earlier this week, the Chairman said that he was very concerned at the apparent mismatch between the central role that the British Council plays in our national endeavours, and the inadequate priority that it seems to get in the public expenditure queue. That point was reiterated earlier.
The debate and the speeches of hon. Members on both sides of the House amount to a serious indictment of the Government's approach to the British Council. The concern that has been expressed today, like the earlier concern about the BBC World Service, goes beyond the Opposition; it is widespread in and outside the House. We call on the Government to respond to that concern today by announcing that they will reconsider those savage cuts, which are highly damaging, not only to the work and future of the British Council and to Manchester and the constituents of my hon. Friend the Member for Manchester, Central, but to British interests in today's world.

The Minister of State, Foreign and Commonwealth Office (Mr. Jeremy Hanley): As the Minister responsible for the British Council, it is my privilege to reply, on behalf of the Government, on the subject chosen by the hon. Member for Manchester, Central (Mr. Litherland) —the British Council. I am very grateful to the hon. Gentleman for initiating the debate, and for

giving me the opportunity to make clear the Government's appreciation of, and strong and continuing support for, the British Council.
As my noble Friend Lord Chesham said in the other place on 1 February 1996, the council is an integral and essential part of the United Kingdom's diplomatic and aid effort, and has been working in support of British interests overseas for more than 60 years.
Hon. Members on both sides of the House have spoken in glowing terms of the council's activities in a broad range of areas. I do not want to pick any particular speech. I shall mention the sacrifice of the hon. Member for Glasgow, Central (Mr. Watson); I believe that he is speaking on his birthday, and it cannot but be a great tribute to the British Council that he should give his time for that cause.
The scope of the council's work is indeed impressive: from promotion of the English language to the recruitment of overseas students, from high-tech information services to the promotion of development and good government, from scientific collaboration to the contemporary arts. All those activities have something in common: by highlighting British excellence and creativity, they enhance our prestige, support our exports and make long-term friends for the United Kingdom. In doing so, they complement and contribute to the work of the Foreign and Commonwealth Office in diplomacy, overseas aid and export promotion.
During the past 10 months, I have been most impressed by the council's operations, and have tried to visit them in every country I have been to. In Vietnam, the council is teaching English to officials who need English so that the country can play a full role in the Association of South-East Asian Nations. The Vietnamese Government were warm in their appreciation when we discussed the subject.
In Japan—to which the hon. Member for Gateshead, East (Ms Quin) referred—the council's activities support and underpin our important political and economic relationship and help to satisfy the hunger of a discriminating Japanese public for the best that is available in the arts and sciences. They succeed so well that the council's input often triggers a much larger contribution from the Japanese themselves, to which the hon. Lady also referred.
In India, I was especially struck by the council's network of libraries, which are an important source of information and expertise to their very large membership—people who are working hard to transform that country, already the world's largest democracy, into a developed and prosperous state. The libraries are also used by students seeking information about study in the United Kingdom. In some cities where we have no official commercial presence, the council's Department of Trade and Industry-funded overseas business centres provide facilities and contacts for visiting British business men and women.
The hon. Member for Linlithgow (Mr. Dalyell) asked where the council stood in the list of priorities for Government resources. We have recognised the council's valuable role in public diplomacy and development by substantially increasing its grant in aid, which we have increased by more than one third in real terms since we took office—between 1979–80 and 1995–96. That, together with internal efficiency savings and an expansion


of non-grant activity, has enabled the council to expand its operations massively. It now has more than twice as many officers as, and operates in a third more countries than, in 1980.
The hon. Member for Torridge and West Devon (Miss Nicholson) said that we now operate in 109 countries, and she is right, but she did not say what the growth had been, because the council now has 229 offices in 109 countries, as against 108 offices in 79 countries in 1980. That extremely good record of expansion has been achieved under Conservative Governments.
We have been especially pleased that the council was able to seize opportunities opening up in central and eastern Europe after 1989, capitalising on the good will created and the friends made as a result of its persevering work during the dark days of communism. In the subsequent years, the council has helped those countries build up their English language teaching capacity and restore a flourishing network of contacts with fellow professionals in the west. The council's resource centres have also given the United Kingdom a high profile in many cities throughout the region.

Mr. Dalyell: Will the Minister give way?

Mr. Hanley: I am sorry: I really must place on record what I want to say, and I am sure that the hon. Gentleman, with his customary courtesy, will allow me. If I have time towards the end, I may allow him to intervene.
I say all this to emphasise that the Government recognise and very much appreciate the council's work throughout the world. Against that background, I turn to the subject that most interests hon. Members today—the reductions in the council's grant in aid during the next three years.
Hon. Members will know that the council receives two separate grants in aid, one from the diplomatic wing of the FCO and the other from the ODA. The diplomatic wing at present provides about three quarters of the total.
As hon. Members will also recognise, pressure for further efficiency means that the last public expenditure round was extremely rigorous, and all Government Departments have been involved in a drive to cut costs and sharpen priorities. In the public expenditure survey settlement, the FCO diplomatic wing took a cut of about 7 per cent. in its baseline in each of the three years covered by the survey. As a result, the diplomatic wing budget is scheduled to fall by about 12 per cent. in real terms over the period.
As it is Government policy to strengthen, rather than reduce, the promotion of British interests overseas, that represents no mean efficiency challenge. In those circumstances, inevitably the council could not be exempt from the need to make further savings.
In deciding the grant in aid for the council, the diplomatic wing took account of the fact that the council's baseline was already declining following the 1994 PES, and sought to lessen the impact of the 1995 settlement. Accordingly, we passed on to the council only part of last autumn's cut, imposing an extra burden on the diplomatic wing. In that way, we ensured that the percentage reduction in the diplomatic wing's grant in aid to the

council over the three-year PES period was broadly in line with the reduction in the diplomatic service's budget as a whole.
That was a tribute to the value that we attach to the council's work, given the pressure for extra effort and resources for other FCO activities, including the promotion of exports and inward investment, consular work and immigration control overseas, diplomacy and negotiation—all of which are crucial to the prosperity and well-being of the people of this country.
As for the ODA grant in aid, hon. Members will be aware of the pressure on the aid budget, especially given the inexorable rise in our binding commitments to the multilateral agencies and European Union programmes. Within the reduced bilateral aid budget, Ministers' first priority remains the country programmes, which provide direct assistance to those developing countries working to put in place sound development policies and good government. That placed additional pressure on other parts of the aid budget. The real terms reduction in the British Council grant in aid was comparable with that for non-country bilateral programmes as a whole.
However, the council contributes to development, not only through its grant-in-aid work, but through contract work under the bilateral aid programme, for which it competes with other British suppliers. The council has a good record in winning such business. Overseas Development Administration contracts will account for nearly £100 million of the council's turnover this year. We expect that project work to continue, and hope that the council will also be able to promote development increasingly through the management of multilateral aid programmes.
The Government welcome the fact that, in the present circumstances, the council has chosen to take a radical look at all its operations in order to focus on what is essential and what might be done differently. It has concluded that its most valuable asset is its network of overseas offices, which has enabled it to build up extensive contacts with overseas Governments and organisations. It has decided—rightly, in the Government's view—that the first priority must be to preserve that overseas network as far as possible.
The corollary to that is that there will have to be radical changes in the United Kingdom. How the council chooses to restructure its operations in those circumstances is largely a matter for its management. We understand that its management propose to make greater use of specialist advisers from outside the council rather than in-house expertise, and to concentrate on front-line functions by making reductions in support staff—both proposals are very much in line with trends in other organisations in both the public and private sectors.
The hon. Member for Manchester, Central and other right hon. and hon. Members have drawn attention to the staffing reductions that that process will entail—on top of reductions that have taken place over the past few years. The council has already embarked on a new voluntary early retirement programme. Some compulsory redundancies will almost certainly be required, too, although the actual number is not yet known. That is always a painful process, especially with staff who have given loyal and committed service to a cause in which they strongly believe.
We naturally regret the distress that the process will inevitably cause to those involved. We understand that staffing reductions are likely to occur in both London and Manchester, but that the council is most unlikely to withdraw from Manchester completely. I have visited the office, and share the admiration that has been expressed for it in the House today.
The Government recognise that, even after restructuring in the United Kingdom, the council will need to make some adjustments to operations overseas. The council is currently discussing its plans with the Foreign Office, to try to ensure that the impact on our interests overseas is kept to a minimum. The Government do not want to see the closure of British Council posts.
Studies are therefore being undertaken with the aim of avoiding closures. The results of those studies should be available later this month, and I cannot today anticipate the outcome, but I believe that the results will emerge before the end of the month. We do, however, recognise the council's urgent need for clarification of the funding prospects.
Studies are also being undertaken by the efficiency unit, which is looking at the council's proposals for dealing with the projected decline in the grant in aid following the 1995 PES settlement, including redundancy plans, and its approach to improving the efficiency and effectiveness of its operations at home and overseas. The council is co-operating fully with the efficiency unit in its work. We expect that report by the end of this week.
The council is, of course, much less dependent on the grants in aid than it used to be, with nearly half its income now drawn from revenue-earning activities. The council's English teaching operations in particular have expanded rapidly, spreading the highest professional standards and attracting an influential clientele in a wide range of countries.
I have visited many posts throughout the world and seen English teaching in action—it is popular, and there should be more of it. We are delighted that the council, together with other organisations involved in English teaching, is taking advantage of the huge demand for English overseas to promote the language at no cost to the taxpayer. I agree with those right hon. and hon. Members who have today said that they want English English, not some other version of English, to be taught around the world.
The council's direct teaching operation is entirely self-financing—there is no question of subsidy from the grants in aid. People sometimes level criticism at the British Council because they believe that it subsidises the teaching of English, and is unfair to those who teach English in the private sector. I can assure the House that I have looked into the matter, and that the council's teaching of English is on a very fair cost basis—there is no subsidy from grants in aid for it.
The council has also been very successful in drawing in sponsorship and partnership funding, both to make the grants go further and to cement relationships with partner

institutions both here and overseas. The Education Counselling Service, which runs a student recruitment service in key markets overseas and is co-financed by the council and British academic institutions, is an excellent example of partnership in action. The arts events supported by the council are now largely paid for by sponsors, with the council's contribution limited to professional expertise and modest seedcorn funding.

Mr. Dalyell: What has been said today by the Minister's colleagues should be brought to the attention of those undertaking the studies and of the Treasury. Parliament's views should be taken into account.

Mr. Hanley: I can give the hon. Gentleman that assurance—indeed, I was about to mention that subject.
My hon. Friend the Member for Broxtowe (Sir J. Lester) mentioned the Select Committee on Foreign Affairs, where the Chairman recently remarked on an apparent mismatch between the council's central role and its position in public expenditure terms. The Select Committee will be looking at FCO expenditure in greater detail later this month, and will then consider the council's position in relation to the diplomatic wing and the ODA as a whole.
Obviously, there is no point in my commenting on the transcript of the Select Committee's minutes, except to say that my right hon. and learned Friend the Secretary of State and I have read it, and we shall take it into account in the next few days. There is no point in my commenting in detail on the Chairman's remark before the Committee has completed its deliberations.
Right hon. and hon. Members have spoken most eloquently this morning about their support for the activities of the council, both at home and overseas, and their concern over the reduced funding of those activities. The debate will be read, and decisions will be complete by the end of May—I repeat that assurance for the benefit of the hon. Member for Linlithgow (Mr. Dalyell).
Let me conclude by reiterating the Government's strong support for the British Council and its role in winning hearts and minds for Britain around the world. The council, like many institutions, is having to face up to a period of change. It will in future have a smaller UK base, and rely more on outside advice. There will have to be some reordering of priorities overseas.
Some of those adjustments may be painful, and we recognise that hard choices have to be made. But all organisations today face the problems of challenge and change, and the council has a long record of successful adaptation to new circumstances. I have no doubt that the council, with its extensive overseas network, will continue to play an important role in furthering Britain's prestige, influence and interests for many years to come. That is certainly the Government's intention.
I conclude by repeating that the council now has 229 offices in 109 countries. When the Government took office, there were 108 offices in 79 countries. That is a record of achievement.

School Transport (Devon)

Mr. Patrick Nicholls: Perhaps the most popular reform introduced by the Government since 1979 is that which enables parents to send their children to a school of their choice. That policy appeals to parents of all political persuasions and of none. I initiate this debate because, if the policy is to work in rural areas, the local education authority must operate a fair, humane and justifiable transportation policy. At present, the policy in Devon operates along the same lines as the Ritz hotel: we are all free to dine at the Ritz, provided that we can afford to do so. Increasingly, in Devon one must be able to afford to send one's children to the school of one's choice.
The LEA has adopted a school transport policy that makes a mockery of parents' right to choose—and I would argue that that is its intention. I shall set out the facts for the House. The law is clear enough: section 55(1) of the Education Act 1944 states that free school transport must be provided when a designated school is more than two miles away for a child under eight or more than three miles away for children over that age. That is the law as it stands at present. The problem is that, when parents in Devon choose to exercise their right to send their children to the school of their choice, the local education authority tells them that they must meet the transport costs, as the county will not.
When pressed about the matter, the LEA sets out two arguments. First, it says that it does not have enough money. Secondly, it says, "If you think we are bad, the previous Conservative administration was bad also." As to the latter point, the previous Conservative administration followed a similar policy which I criticised at the time, as I do now. However, there are significant differences in the behaviour of the previous Conservative and the present Liberal administration.
As there are many excellent schools in Devon in general, and in Teignbridge in particular, more parents want to exercise their choice not to claim that one school is better than another, but to say that a particular school is right for their child. Even though I criticised the behaviour of the previous Conservative administration, I admit that it did not go to the same extraordinary lengths as the current administration in defying parental choice. I shall return to that point later.
I must lay to rest the claim that the LEA policy is all about money. Perhaps my hon. Friend the Under-Secretary of State for Education and Employment will address the grant settlements issue in general when responding to the debate, but at present the settlements are very generous compared with previous awards. The case is much more fundamental. This morning, I debated the issue on a local radio station. The Liberal spokesman who argued the case with me said that I was asking for all transport costs to be subsidised, no matter what choice parents made. He made the ludicrous statement that I had argued that, if a child living in Exmouth wanted to go to school in Plymouth, the county should meet the transport costs involved. It is complete nonsense; I have never said that.
My view is reflected by the parents who have contacted me. They do not want the local authority to provide extra money: they want the county to make the contribution that it would make in any event. In rural areas, designated

schools are often more than three miles away and there is a cost involved in transporting children to those designated schools. The scores of parents who have written to me, telephoned me, come to my surgeries or met me at public meetings in Teignbridge do not ask their fellow council tax payers to meet the extra cost that the county might incur. However, at the very least, they expect that the county will not profit from their desire to choose their children's education.
That is what is happening. When the county refuses to contribute what it would have paid if parents had sent their children to designated schools, it does not have to produce extra money—in fact, it makes a saving. It is important to stress that point. The parents to whom I have spoken and the teachers and the governors who have written to me do not want the county to meet the extra costs of transportation: they simply want the county to pay the money that it would contribute in any event.
The best way to illustrate the injustice and the inevitable motives behind the LEA policy is by giving some examples to the House. A local school has provided me with several such examples, but I shall refer to only three. The first concerns an older child who was to attend the King Edward VI school at Totnes, which is known as KEVICs. That is a designated school. However, the school was full that year, so the county sent that child to the South Dartmoor community college and paid the transport costs.
Two years later, a younger sister entered secondary education. She was to go to KEVICs, but her parents wished to send her to the same school as her sister. The parents were told that the county would not provide free transport and that they could apply for a concessionary place on the bus, amounting to £40 per term. However, that concessionary place can be withdrawn at short notice if an entitled child joins the school. If the parents cannot afford £120 per year, the only solution would be for the two children to attend different schools.
Another common example involves a group of parents from a village outside a school's designated catchment area who approach the LEA requesting that an established route be extended to the village. The parents agree to pay the balance of the cost of that extended route, but the county will not agree to their proposals. I heard of a similar case when I met parents from Chudleigh. Those parents had made it clear to the county that they would underwrite and reimburse the county for any extra expenses that might be incurred in sending their children to the school of their choice. However, their proposal was rejected.
The third example concerns children with examination commitments and GCSE courses of study. They may be provided with transport—usually an expensive taxi—if they move from within the catchment area to a new home outside that area. However, younger children with no GCSE commitments cannot be considered for transportation to their original school and are expected to change to a new school, even if a taxi with seats available is provided for the older child. The teacher who provided me with those examples concludes:
The Government's laudable policy of free parental choice of schools cannot operate at present as parents who exercise their right then find themselves faced with a transport bill which can run to several hundred pounds per year, or serious personal inconvenience".
I am not aware of that teacher's political affiliations, but I know how he feels about the issue of parental choice.
I shall give the House two other examples. The first relates to my constituents who live in Lustleigh, which is a village on the edge of Dartmoor. There are two villages near Lustleigh—Moretonhampstead and Bovey Tracey. Lustleigh no longer has a school, but there are schools at the other two villages which are virtually equidistant from Lustleigh. I believe that in the past they were co-designated schools, but that is no longer the case.
Mr. and Mrs. Foskett of Lustleigh have written to me about their experience, and it is worth quoting from their letter at some length. They say:
School transport for pupils attending both Bovey Tracey and Moretonhampstead Primary Schools has been a long-running issue for parents in Lustleigh and one which has now progressed to the ridiculous, as evidenced by the disgraceful treatment my youngest son, Richard, has recently received.
When my 8 year old son Michael came of school age he was unable to attend Bovey Tracey school"—
the designated school—
because of pressure of numbers. Consequently, we had no choice but to send him to Moretonhampstead Primary School. After much debate between ourselves and Devon County Council it was agreed that Michael should receive free school transport.
When our youngest son Richard started school last January we naturally wanted him to attend the same school as his brother for several reasons which should be apparent. This decision, after appeal in September 1995, was viewed by the LEA as an exercise in parental choice, and therefore, our appeal for free school transport was rejected. Richard continued to travel on the bus whilst we awaited notification as to how much, when and where to pay the fee. To this date"—
the letter was dated January 1996—
no such notification has been received by ourselves.
However, when school resumed following the Christmas break Richard's name did not appear on the passenger list. The bus driver continued to carry him on an unofficial basis, for which he has received a reprimand, whilst we attempted to resolve the situation. We were in the process of doing this and had been in touch with the LEA when Richard was refused access to the bus in order to come home from school. As we are not on the telephone it fell to his 65 year old grandmother to walk from her home in Moretonhampstead to collect him, whilst Michael travelled as normal. The insensitivity of this act towards a bemused 5-year-old child has left us shocked and dismayed, and has resulted in the ridiculous situation of one child travelling to and from school on the bus whilst we follow with the other in the car.
Their concluding words are far more graphic than anything I could devise:
There are obviously wider issues here also. Government policy of expanding parental choice in education would appear, in rural Devon at least, to contain the proviso of having the financial wherewithal to reach the school of your choice. The result for many in Devon is, therefore, no choice.
I am aware that finances are tight—but this is an issue that can be resolved, in our case at least, at no extra cost to the council taxpayer.
That is a good example of what I said earlier.
Perhaps the most grotesque example, which, if it were not so serious would be laughable, concerns Mr. and Mrs. Walters who live in Denbury. Their nearest school is the South Dartmoor community college, which is some 4.3 miles away from their home, but that is not the school designated by the county council. The county has chosen Coombeshead college, which is an excellent school, as is Knowles Hill school, to which I shall refer in a moment.
Mr. and Mrs. Walters wanted their son Mark to go to Knowles Hill school. They contacted the headmaster and said that there appeared to be a problem in respect of the

distance from their home to the school. So the headmaster had it measured. I quote from his letter to Mr. and Mrs. Walters:
I have had the distance between your area and the two schools independently measured and I can confirm that Knowles Hill school is nearer than Coombeshead when measured along the route that all the children will travel.
One might have assumed that the country would be prepared to accept what the headmaster had said in that regard, but not a bit of it. Then, at God knows what cost in terms of officer time and the like, the county managed to devise a route whereby the designated school was nearer. It finally came up with a route which meant that Coombeshead was nearer than Knowles Hill by some 352 yd.
Coombeshead and Knowles Hill schools are not only in the same town and within sight of each other. Not only do they share part of a campus, but they share the same bus stop. In other words, whether Mark Walters travels to the school he wants to attend or the school that the county wants him to attend, he will have to get off the bus at the same stop. If one example shows beyond all doubt the motives behind the council's policy, that is it. The schools share the same bus stop, yet the county will not concede that parents have a right to choose.
I could cite numerous examples if time permitted. Some Catholic parents living in Dawlish wrote to me as follows:
We thought that when our children left Our Lady and Saint Patrick's RC Primary School in Teignmouth to which free travel is provided they would be able to attend Cuthbert Mayne Secondary School Torquay with the majority of their classmates. At the end of the 1994 Easter term the 'temporary' bus service which had been in operation for many years was withdrawn by the county council from Dawlish. Parents wishing to send their children to Cuthbert Mayne then had to make alternative arrangements.
They continued, as so many parents have done, by asking what is happening to parental choice in Devon.
When one examines those cases and asks what fiscal policy is being served, the answer is none. Those parents are seeking the same contribution that the county would have had to make in any event. What possible straightforward, decent, laudable educational policy is being served by treating parents in such a way? It is ludicrous that a school bus is allowed to carry one sibling but not the other. The same bus route and the same bus stop can apply to two schools but the county will not allow parents any choice. Despite the fact that the LEA says that it is short of money, it considers it a good use of officers' time to devise a particular route to ensure that the route to its designated school is 352 yd shorter.
What can be done? I look forward to a change in the law so that local education authorities are not allowed to behave in that way. That is obviously something for the future. Today, I am concerned about the parents in my constituency. When the route between a designated school and a child's home is considered, it should be on the basis that it is a suitable, safe route that a child might reasonably take. I have cited a few examples, but I can give countless others where, to put it as neutrally as I can, there is a grave suspicion that the way in which Devon county council operates that policy has nothing to do with prudent financing and everything to do with thwarting an educational policy with which it is politically out of sympathy.
I hope that, in my hon. Friend's reply to the debate, she will at least say that she is prepared to examine those individual cases and the way in which Devon is operating the policy and attempt to bring some relief to parents in my constituency who, at present, have no hope.

The Parliamentary Under-Secretary of State for Education and Employment (Mrs. Cheryl Gillan): I start by congratulating my hon. Friend the Member for Teignbridge (Mr. Nicholls) on securing the debate on a matter of great concern to parents and teachers in his constituency.
My hon. Friend is well known as a champion of parental choice in education. Therefore, it comes as no surprise to me that he has raised that issue in the context of school transport, particularly in the rural areas of his constituency. The Department is already well aware of my hon. Friend's deep concern about the issue following his correspondence with my right hon. Friend the Secretary of State last summer.
Home-to-school transport is a complex and at times contentious subject, so it is important to be clear about the legislation governing its provision. Let me begin by outlining the legislative duties and powers in relation to school transport that are set out in section 55 of the Education Act 1944. Briefly, it states that LEAs must provide free transport if they consider it is necessary to enable a pupil to attend school and that they may help other pupils with their fares.
LEAs have considerable scope to decide when transport is necessary. However, "necessary" is not defined in law; LEAs must consider each case on its merits. Relevant factors include specifically a pupil's age, the nature of possible routes to school and a parent's wish for a child to attend a school of religion or denomination to which the parent adheres.
Free transport is always necessary for pupils of compulsory school age—those aged between five and 16—who attend the nearest suitable school if it is beyond statutory walking distance. Free transport might exceptionally be necessary for a five to 16-year-old who lives within walking distance of the nearest suitable school or attends another school further away. It is for an LEA to consider such a case on its merits.
Court rulings, however, have made it clear that LEAs do not need to provide free transport for pupils whose parents have chosen to send them to a school which is not the nearest suitable one, even if it is beyond statutory walking distance. The additional cost of providing free transport in such circumstances has to be weighed against other priorities. LEAs have ample powers to support choice by helping pupils who do not qualify for free transport, but it is for each LEA to decide whether and how to exercise those powers.
In our view, LEAs' transport responsibilities have one main aim: to ensure that transport difficulties do not deny any pupil an education suitable to his or her ability, aptitude and any special educational needs. But the law rightly gives LEAs wide scope to adopt a transport policy that meets local and individual needs. However, two points are worth emphasising. First, an LEA's policy

should always allow for individual cases to be considered and for appeals to be heard. Secondly, LEAs should ensure that their policy is widely known, so that parents can take account of it when making their choice of school.
In January 1994, my Department sent a letter to chief education officers setting out guidance which we have given in recent years to LEAs on a range of school transport issues. We made it clear that LEAs have the power to help with costs in cases where pupils are not entitled to free transport. We advised that those powers are intended, among other things, to help parents to secure their choice of school, especially in rural areas such as my hon. Friend's constituency, where we recognised that transport can pose particular problems.
It continues to be open to authorities to offer assistance to pupils whose parents have chosen to send them to a school that is not the nearest suitable one. In doing so, however, authorities will wish to continue to take account of two factors: first, whether a pupil's journey to school might be unduly long or tiring, or might otherwise conflict with a pupil's ability to profit educationally; secondly, the financial implications.
Against that background, I understand that it is Devon LEA's policy to provide free transport to a pupil's designated or nearest suitable school if it is beyond statutory walking distance. The policy allows for free transport to be provided in other exceptional circumstances, and allows for each case to be considered on its merits. As my hon. Friend has clearly shown, however, the LEA does not normally provide any assistance when parents choose to send their child to a school which is further away than their nearest or designated one—or, it would appear, to one just alongside.
As we have made clear in correspondence, that policy seems one which the courts would regard as lawful and reasonable, at least in the strict legal sense. My hon. Friend has helpfully outlined how the LEA is operating its policy in some specific cases, and he has certainly challenged its decisions on the basis of common sense. Moreover, on the basis of the evidence that he has presented, I have great sympathy with his views. There seems to be here an element of what might qualify for Esther Rantzen's "jobsworth" award. I would certainly like to look at it more closely. I will therefore follow up the matters that my hon. Friend has raised today, and I hope to be able to write to him in due course.
LEAs in England already spend about £300 million a year on home-to-school transport. Some 80 per cent. of that—around £240 million—is spent by the shires. Devon LEA spends about £12 million a year. My hon. Friend has said that Government funding is sometimes cited as a convenient beating board, so perhaps I should put on the record, once and for all, the financing of Devon's LEA.
Devon's education standard spending assessment for 1996–97 is about £345.9 million, an increase of 5.3 per cent. on 1995–96. It compares very favourably with the national increase of 4.5 per cent. Indeed, since 1990 Devon LEA has received a 38 per cent. increase in education funding. I hope that my hon. Friend will take note of the figures and use them in his constituency.
It is often argued, on parental choice, safety and environmental grounds, that school transport provision should be increased still further. Realistically speaking, demand for free or subsidised transport to schools will


always exceed what LEAs think that they can afford, and spending more on transport would obviously mean spending less elsewhere on education.
There is, however, one way in which that gap might be bridged. Schools could supplement statutory transport provision by arranging transport to meet the needs of other pupils on a full cost-recovery basis. Such transport would help to enhance parental choice and could offer safety and environmental benefits.
Local authorities seem well placed to help schools with such arrangements. They have expertise in drawing up transport contracts and dealing with operators. They are familiar with transport law and with the strict rules governing transport provided for hire or reward. They also have greater buying power than individual schools. I think that there is great scope for LEAs and schools to co-operate in finding imaginative ways of helping—at minimal public expense—pupils who fall outside the free transport provisions established by the 1944 Act.
I get worried when I hear stories of LEAs allegedly attempting to thwart parental choice—one of the most successful elements of Conservative education policy. I fully appreciate, too, the difficulties that my hon. Friend has described. There is no doubt that decisions on the provision of school transport in rural areas like Devon can often be controversial and contentious, as my hon. Friend has ably demonstrated today.
I hope that I have explained that the law is perfectly clear on school transport and parental choice. This is an area of LEA discretion; but LEAs do have powers to assist pupils who do not qualify for free transport, including those whose parents have chosen to send them to a school that is not the nearest suitable one—even if it is beyond statutory walking distance. However, it is for each LEA to decide whether and how to exercise those powers.
The cases that my hon. Friend has cited will give anyone listening to the debate cause for thought. Hence, I repeat my undertaking to look into them in more detail and to write to my hon. Friend once we have probed more deeply into the facts. As for the other examples to which he referred but which, because of a lack of time, he was not able to describe in detail—I enhance my offer: if he will let my Department have the full details of those cases, I shall look into them as well. I hope that my response has been helpful.

Rural Development (Isle of Eigg)

Sir Russell Johnston: The Isle of Eigg was bought from Mr. Keith Schellenberg in April 1995 by a still mysterious German—allegedly a "fire energy" painter, called Marlin Eckhard Maruma, of Stuttgart. He is understood to have paid about DM4 million, which is about £1.6 million. Mystery also surrounds where he got the money from.
This man's purchase of the island, and subsequent descent to it in a helicopter was surrounded with ballyhoo and promise. A fast ferry was to be introduced; holiday cottages were to be built; a sports hall and swimming pool would be constructed. There would be a medical centre; there would be horse breeding, and a fish farm would be developed around the lodge. Security of tenure was promised to tenants. The village hall site was to be sold to the community.
Now, 13 months on, only one thing has happened. The estate livestock—about 1, 000 sheep and 70 cattle—have been sold, at an inappropriate time, to pay the stockman, who now has no stock.
I shall quote passages from letters in a continuing correspondence between the Government and myself about Eigg. I begin with a letter from myself to the Secretary of State on 29 August 1995. It reads:
I am increasingly concerned about the future of the Isle of Eigg. I realise that the purchase of land is not regulated by the state, but, in this case, there is a small and precarious community whose life is very much bound up with the behaviour of the landlord. I wonder what consideration has been given to the situation by the Scottish Office and if it has included consideration of purchasing it for the nation.
A reply came from the Earl of Lindsay, not from the Secretary of State. The letter is interesting because it encapsulates the Government's attitude to this issue. The Minister's letter of 21 September 1995 reads:
I am in no doubt that the system of private ownership of land which prevails in Scotland is the most effective way of achieving a good quality of life for all who live in Scotland. It would not only be undesirable but also impracticable for the Government to seek to purchase large areas of Scotland or to impose detailed management prescriptions on privately owned land.
I shall quote next from a letter sent by Lord James, our dear, beloved Minister of State, who I think is responsible for the highlands. But perhaps that is a task that the Under-Secretary of State has inherited. I see that the Minister nods. It is probably the only time that he will nod during the debate. On 3 April the Minister of State wrote:
As you know"—
these letters always include "as you know", but I seldom do. When I am told, I often find the information difficult to believe. After "As you know", the letter reads:
the Government are firmly committed"—
they are always "firmly committed", not merely committed—
to the removal of unnecessary and anti-competitive restrictions. The introduction of any regulatory mechanism governing who should be allowed to own property would be inconsistent with this policy.


Let us consider more closely the Government's responses. We have the letter from the Earl of Lindsay about it being
undesirable but also impracticable…to purchase large areas of Scotland".
I did not suggest that the Government should consider purchasing large areas of Scotland. No one has made that suggestion. I am asking the Government whether they are prepared to take some action in the few, but concerning, instances when a landlord behaves irresponsibly and insensitively and thereby puts a community at risk. That is what was asked. The Government chose not to reply to that question.
Incidentally, the Earl of Lindsay's letter of 21 September ended as follows:
I know it must be unsettling for the people of the island and I shall continue to watch developments.
Doubtless the Minister has. He has certainly done nothing else. He, the Scottish Office and the Government have watched a community be put at risk, yet they have taken no action. At the same time they have excluded any of the solutions on offer.
Again, I shall quote the Earl of Lindsay, the Under-Secretary of State. The quotations may be boring for some, and I apologise to them, but at the same time they are interesting to me and others. On 25 March, the Earl wrote to me on behalf of the Secretary of State. The letter reads:
You suggested that the Government might purchase Eigg, or allow the local community to do so, should the island be put on the market. We do not consider that it would be appropriate for the Government to purchase the island, but we would not stand in the way of the islanders acquiring the land if they so wished.
Big deal. How magnanimous.
Oddly enough, I did not ask the Government whether they would "stand in the way". I told the Secretary of State that there were proposals for a community buy-out, which might be a good solution. I explained that raising the money would be difficult. I observed that if the Scottish Office could in some way act as a guarantor, that might make such a buy-out feasible. I asked the right hon. Gentleman to give that some thought. The Government's evasion is a bad way of treating the islanders, bearing in mind the patient and polite persistence of someone such as Karen Helliwell, the secretary of the Eigg residents association, on whose behalf I advanced the argument.
I return to the Earl of Lindsay's letter. I apologise to my hon. Friends for so doing. His final sentence is one that my hon. Friend the Member for Ross, Cromarty and Skye (Mr. Kennedy) would describe as "a cracker". The Earl wrote:
As you know—
here we go again—
we are committed"—
he did not write "firmly committed", only "committed". Weakness is creeping in. The letter continues to tell me that the Scottish Office is "committed"
to the sensitive and sustainable development of rural areas.
All that I can say in reply to that is, "Rubbish." The Government are committed to the removal of any restrictions on the landlord's actions and opposed to any

regulations, or central action, that might protect tenants or crofters, or any individuals living on an estate, in this instance Eigg. How can a Government who are pressing for unfettered deregulation be committed to the
sensitive and sustainable development of rural areas"?
As a Liberal. I applaud private initiative. I believe that it should be encouraged. By the same token. I see the state as having a duty to protect the weak and defend the exploited. Such action may require regulation or intervention. The Government have done nothing but watch.
What could they do? First, they could buy, as Rhum was bought. One of the national community instruments could be used to manage the island, as Scottish Natural Heritage manages Rhum and as the National Trust manages Canna, gifted through the generosity of that remarkable man John Lorne Campbell, who died, full of years, last week.
Secondly, the Government could underwrite a local community buy-out. As I have said, the Government have not responded to that possibility. Thirdly, the Government could urgently send a representative to Eigg so as to obtain a clear picture of what is certainly a fast-deteriorating situation, and then act directly on behalf of the community to negotiate with Mr. Maruma, who no one seems able to find. I am certain that the Germans would help the Government to find him. We know that he exists; he is in Stuttgart. Only the Government have the power, authority and resources to act in such a way. Neither councillors nor hon. Members can match the Government's powers in this respect.
Fourthly, and lastly—I give the Minister a little warning—in the short term, the Government should act to protect development funds that may lapse or have lapsed because of Mr. Maruma's neglect. I refer especially to the money budgeted for the hall and the prospect of funds for the millennium forest project, which should be reinstated. I am sure that the Minister knows that the project could not be proceeded with, given Maruma's failure to sign the requisite documents, despite the deadline being twice extended.
The people of Eigg look to the Minister to help them in a situation where only the Government can act. I do not intend to enter wider, long-term areas. I am sure that the Minister knows that what has happened in Eigg has happened before, as it happened in Raasay, which is still very much in my memory. Dr. Green was popularly known as Dr. No in those days. We know that Knoydart is again on the market. It is not enough for the Government to say simply that they will watch. They must act.

The Parliamentary Under-Secretary of State for Scotland (Mr. George Kynoch): I congratulate the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) on securing this debate on the subject of Eigg, which is in his constituency. He has been on his normal form and most entertaining, but somewhat cynical in some matters.
I have considerable sympathy for the position in which the Isle of Eigg's residents find themselves. Small islands such as Eigg point up in an especially prominent way the problems facing many rural communities in the highlands and islands, where there is a need for all sections of the community to work together to common ends.
The Government wish to encourage such an approach, based on partnership between local residents and the main Government Departments, Government agencies, the local authority and private and voluntary bodies operating in the region. We believe that the way forward lies in promoting partnerships, not in introducing, as I suspect the hon. Member for Inverness, Nairn and Lochaber might wish, new regulations on the purchase and sale of land.

Mrs. Margaret Ewing: I am interested in what the Minister says because the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) has raised a significant point. Is the Minister saying that the people of Eigg should have no legal redress? Surely, landowners' responsibilities should be matched by duties, and there should be some mechanism for legal redress.

Mr. Kynoch: I hear what the hon. Lady says. I believe not in regulation but in deregulation. That is a significant difference between Conservative and Opposition Members. Clearly, the island's owner has a responsibility not only for the environment, but for looking after his asset.
May I just recap? As the hon. Member for Inverness, Nairn and Lochaber said, Eigg is one of the group of islands west of Mallaig known as the small isles. Each island—Eigg, Rhum, Muck and Canna—has its unique features, different landownership and other characteristics. Each is outstanding for its scenic and natural heritage qualities.
Eigg's economy has traditionally been based on crofting, with some larger farms, forestry and inshore fishing. I am glad that, more recently, efforts have been made to increase tourism to that beautiful part of Scotland. The islanders have taken the initiative in developing new enterprises such as a tea room at the pierhead, craft goods and accommodation for visitors.

Mr. Charles Kennedy: As the Minister mentions the efforts to promote tourism, which, as he rightly points out, are extremely important to the economy of fragile islands such as Eigg, may I draw his attention to the concerns of people on the Sleat peninsula on the Isle of Skye? Despite the fact that there is an improved service between Mallaig and the Isle of Skye, Caledonian MacBrayne's summer schedules do not allow people to make day trips to the small isles. The good efforts to promote tourism and to help the island of Eigg in that respect have been thwarted by Caledonian MacBrayne's inability to get its schedules in order. Will the Minister do something about that?

Mr. Kynoch: As I think the hon. Gentleman knows, about 10 days ago I chaired a meeting of the Scottish tourism co-ordinating group in Inverness, where all the relevant interests associated with tourism meet regularly to discuss how they can work better together to ensure that we build on our remarkable success with tourism in Scotland. We are trying to ensure even better co-ordination on transport links both within Scotland and to Scotland so that we can build on that success, but I take on board the hon. Gentleman's comments.
It is important that we have good transport links, but, equally, it is important that we have good facilities for tourists when they get there. That is why I wanted to refer

to the moves by Eigg's population to build something to attract tourism to their island. On that front, I recommend that they work closely with the local enterprise company and with Highlands and Islands Enterprise to find out what assistance and co-ordination they can achieve in their efforts to achieve even greater success.
There is an active community life on the island. All that augurs well for the locally based economic and social development that we wish to promote through the partnership measures set out in the rural White Paper. The Government believe that there can be merits in local communities taking greater control over their own future, including in—

Ms Roseanna Cunningham: Will the Minister give way?

Mr. Kynoch: I wanted to try to get through a response to the hon. Member for Inverness, Nairn and Lochaber and I understood that the tradition was that, if hon. Members wanted to intervene in an Adjournment debate, they should give notice in advance. I have not had prior notice and therefore I have been more than generous in having local interventions—the constituency of the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) certainly adjoins that of the hon. Member for Inverness, Nairn and Lochaber.

Sir Russell Johnston: Will the Minister give way on that point?

Mr. Kynoch: Certainly.

Sir Russell Johnston: I am sorry to intervene. I say with some hesitation, but gently, to the Minister that we have 15 minutes left and I doubt whether he will take the whole lot. We have that time because the last debate ran short, so we should take advantage of that to allow other hon. Members to take part.

Mr. Deputy Speaker (Mr. Michael Morris): Order. These are half-hour Adjournment debates and the traditions of such debates are exactly the same in the mornings as they are late at night. These are not the one-and-a-half hour Adjournment debates where there can be adequate interplay, but strictly half-hour constituency Adjournment debates.

Mr. Kynoch: I follow what you say, Mr. Deputy Speaker, and shall proceed accordingly.
The Government believe that there can be merits in local communities taking greater control over their future, including, in some cases, by the purchase of land where they can raise the money to do so. The Government's crofting initiative, whereby the Secretary of State's crofting estates are available for sale to individual crofters or to crofting trusts, is a demonstration of that.
In the case of private estates, the Government do not favour compulsion or new regulations to intervene in the land market, but their agencies stand ready to assist local communities in particular circumstances—for example, where projects that are developed with the backing of local people merit priority. It is, of course, open to any community to bid to acquire an estate in the same way as any other party.
We are all aware that crofters in Assynt set up a trust to purchase the North Lochinver estate to ensure that its future development would be in their best interest. If the people of Eigg wish to follow that route, I wish them every success, but, as far as I am aware, the island has not been put on the market. I commend the islanders, however, because I understand that they are already looking to put together a funding package against the possibility that it is offered for sale.
The hon. Member for Inverness, Nairn and Lochaber made light of and was slightly cynical on the subject of raising funding. It is clearly not easy to raise funds, but I know that the islanders will benefit from the experience of the people in Assynt and that they have already, I understand, been in touch with the new Highland council. I hope that they will have included also Highlands and Islands Enterprise. Clearly, they need first to produce a business plan. I understand that they are well advanced in that, for which I commend them.

Mrs. Ewing: Will the Minister give way?

Mr. Kynoch: With respect to the hon. Lady, I understood what you, Mr. Deputy Speaker, said regarding Adjournment debates and, with the hon. Lady's agreement, I should like to proceed.
The hon. Member for Inverness, Nairn and Lochaber gave me some indication last night of the efforts of the former Highlands and Islands development board. I recall that the board developed plans in the late 1970s to intervene in the management of private estates where that management was regarded as being inconsistent with the interests of the wider community. However, such draconian powers have never been tested, and I do not think that they are the correct approach. The Government's approach is to encourage local communities to work in partnership with Government Departments, Government agencies, local authorities and private sector bodies. Such an approach is at the heart of the measures that were announced in our rural White Paper in December.
Rural policy in Scotland is about the livelihoods of rural communities, the countryside and the lives of those who live and work there. [HON. MEMBERS: "What about the people of Eigg?"] As far as I am aware, Eigg has a largely rural community to which rural policies relate, and those policies should be applied so that the people of Eigg can benefit.
The future of rural Scotland should rest with the people in the rural communities because they are best placed to understand what is most needed in their areas. We are determined to encourage and empower rural communities to achieve a prosperity that is shaped by their own priorities. The White Paper on rural policy for Scotland brought together the many and diverse activities that are already under way to support Scotland's rural communities. It drew into one document our policies for rural communities and how they are put into practice. Working in partnership has been and will continue to be the cornerstone of our approach to rural Scotland.

Mr. Charles Kennedy: This is flannel.

Mr. Kynoch: The hon. Gentleman speaks about flannel. We believe in partnership but, unfortunately,

the hon. Gentleman believes in the state taking over ownership, which is why he is so closely allied to the Labour party. As we all know, the Liberal Democrat party is in bed with the Labour party but its members do not like saying that in parts of Scotland, because it would be electorally disadvantageous.
The White Paper contained more than 25 commitments to action, ranging from new research on rural schools and rural crime to the publication of a discussion paper on the coast and planning guidance for small towns. It also contained three linked proposals for a framework for rural development in Scotland and a system that would help local people to take action on their own behalf. The White Paper consists of three main elements. [Interruption.] The hon. Member for Moray (Mrs. Ewing) should listen, because the White Paper deals with partnership.
The document consists of three elements. First, it proposes the establishment of local, rural partnerships, drawing together the main bodies that operate in a particular area and including the local residents. Secondly, it proposes a national, rural partnership to provide advice on good practice to local groups—a process that could benefit the people of Eigg. Thirdly, and most importantly, the White Paper contains proposals for a new Scottish rural partnership fund totalling £2.5 million and additional resources to help local partnerships to become established and to help local projects.
A new rural challenge fund of £500,000 has been set up, and it is part of the Scottish rural partnership fund. It is now open to local communities to apply for help to fund projects that meet local priority needs. I encourage the residents of Eigg to form a local partnership in conjunction with the local authority and Government agencies, and to submit proposals to the rural challenge fund. The closing date for the first tranche of bids is 15 June. That is the way forward for the residents of Eigg, and we hope to announce the first successful projects in July.
The hon. Member for Inverness, Nairn and Lochaber spoke about the funds for the hall and forest and suggested that they should be protected. I understand that the funds for the forestry projects on Eigg remain available and that the only hindrance is the agreement of the landowner. As the hon. Gentleman has flagged up, that is clearly a problem, but I hope that in due course the hurdle can be overcome. Highlands and Islands Enterprise is always ready to consider proposals, and in the past has provided funding for a music festival.
Specific projects should be submitted to that body and, of course, they will be judged on their merits. The hon. Gentleman's speech was full of cynical jibes which, as I have said, are typical of his party, about the Government's commitment to rural Scotland. My right hon. Friend the Member for Dumfries (Sir H. Monro) contributed much to rural Scotland during his many years as a Scottish Office Minister, and knows exactly what I am talking about.
The Government's commitment to rural Scotland is measured in billions of pounds, and there is evidence that the commitment is working. Employment in rural Scotland increased by 6.5 per cent. in the period 1981–91 compared with an overall Scottish increase of 1.1 per cent. [Interruption.] The hon. Member for Moray makes light of that but, of course, the opposition parties do not like hearing success stories. Unfortunately, they thrive on failure, which is why they will never make progress in Scotland.
The population of rural Scotland increased by about 3.5 per cent. over the same period compared with a Scottish decrease of 1.4 per cent. Long-term unemployment tends to be less severe in rural Scotland. Moreover, rural dwellers feel that the disadvantages that they face are more than balanced by the positive aspects of a clean, safe environment and their sense of belonging to a community.
The Government are doing much to help Scotland's rural communities, which include islands such as Eigg. That is not done by applying restrictive and oppressive controls of the kind that failed so disastrously in eastern Europe and elsewhere and which might be advocated by opposition parties, but by empowering local communities to identify and meet the challenges that they face. The measures in the rural White Paper provide real opportunities to local communities, such as those on the island of Eigg. I recommend that the islanders take full advantage of those opportunities.

Wind Turbines

Mr. Nigel Evans: I am grateful for the opportunity to open this debate, which is important to my constituency. I am pleased that my right hon. Friend the Member for Dumfries (Sir H. Monro), my hon. Friend the Member for Calder Valley (Sir D. Thompson) and the hon. Member for West Lancashire (Mr. Pickthall), who is extremely interested in wind turbines, are in their places.
Energy consumption is increasing, and it is right for the Government to weigh up the environmental impact on the country of increased demand. They have to fulfil their Rio commitments to reduce harmful greenhouse gases, carbon dioxide and methane, and the acidic gases, sulphur dioxide and nitrogen oxides, which are associated with traditional fossil fuel burning.
Sulphur dioxide and carbon dioxide damage crops, cause a decline in forests, acidify lakes and damage the soil. Historic buildings and metals are also eroded and, of course, there are the damaging long-term effects on human health. Asthma and bronchitis are examples. We cannot be insensitive to the appalling problems that will face the world if action is not taken to reverse global warming and acid rain.
Faced with increasing energy demands and improved research, which is able to quantify in detail the environmental damage that is caused by fossil fuels, how substantive is the lure of any energy source that offers a menu of safety and cleanliness and which is renewable and natural? Why do I seem to do a rather poor impersonation of Don Quixote by tilting at windmills when I should be embracing them? It was Don Quixote who, on glancing at 30 or 40 windmills on the plain, stated that he was prepared to engage in battle to slay those giants:
For this is righteous warfare, and it is God's good service to sweep so evil a breed off the face of the earth.
He was a few hundred years ahead of his time. If he was to travel around some parts of the country, he would find no shortage of monstrous giants to tilt at.
In 1991, there were 13 wind turbines; today, we have 518. In my constituency, two anemometers are testing the strength of wind power. If it is sufficient, there will no doubt be an application for wind turbines in the Ribble Valley, which is one of the most beautiful parts of the country. Some wind turbines are 100 ft high, and there are proposals for some more than 200 ft high, monotonously pumping iron and producing relatively small amounts of energy at enormous cost to our natural environment by wrecking the peace of rural areas, scarring the countryside and ruining landscapes. As they multiply around the country, they will prove to be a price not worth paying.
The more I investigate wind turbines, the more I am convinced that the Government will take a long, hard look at their efficiency and benefits compared with the massive sacrifice that some parts of the UK have had to make. They will say that enough is enough. I hope that they will reach that conclusion sooner rather than later. As the chairman of the Countryside Commission said at the beginning of the year:
England's scenic countryside is in danger of being turned into a windpower wilderness.


Seventeen wind energy sites have already been earmarked in or adjacent to sites in the vicinity of national parks. Seven are to be developed on heritage coasts or areas of high landscape value. We are in danger of industrialising some of our most beautiful countryside.
If economic benefit and the efficient production of energy were on the side of the wind argument, cost-benefit analyses would fall more often on the side of the wind factories. However, they do not. According to planning policy guidance 22, the aim of the planning system is to secure economy efficiency and amenity in the use of land in the public interest. That is where wind turbines do not measure up to the hype that surrounds them.
It would take a wind farm the size of the city of Birmingham to produce the same amount of electricity as a modern 1,000 MW nuclear power station. When I learned that, I did not think about the amount of space involved or the raw materials needed to build so many wind turbines, but it made me realise how inefficient wind farms are. There are 518 wind turbines in Britain. To put the matter into context, at 5.10 pm on 29 January this year, UK demand for power was 48,400 MW. The 40 wind farms produced 64 MW of that energy. That gives some idea of how many we would need to have a real impact on our energy supply.

Mr. Cynog Dafis: May I invite the hon. Gentleman to attend meetings of the all-party renewable and sustainable energy group, which discusses such matters regularly and makes it clear that the energy and electricity supplies of the future will depend on relatively small contributions from a range of different renewable resources? Does he accept that the impact of wind energy is as nothing compared to the huge ecological impact of the continued use of fossil fuels—let alone that of the use of nuclear energy?

Mr. Evans: I would be delighted to attend future meetings. We must examine a variety of energy resources, but also what measures can be taken to ensure that the fossil fuels that are burned contribute less to sulphur dioxide and carbon dioxide emissions into the atmosphere. Certain measures must be taken by the energy companies to reduce harmful emissions into the air.
That does not mean that we should do away with one energy source and cover the United Kingdom with windmills. I am sure that the hon. Gentleman knows that the biggest wind farm in Europe is in Powys; it has 103 turbines that produce in a year what a conventional 2,000 MW power station produces in two days. It would require 16,000 windmills to produce that energy.
As well as driving up the costs, the intermittent nature of wind brings other disadvantages. According to the Parliamentary Office of Science and Technology:
the variable and unpredictable nature of wind energy may mean that…not all of the potential savings in emissions will be realised.
That failure to fulfil its potential is caused by two main deficiencies. First, there is the need to provide reserve capacity. Secondly, there are cycling losses caused by the additional fossil fuel used in the increased start-up and shut-down of stations due to the need to adapt to unpredictable changes in the supply of wind. Fossil fuels would still be needed.
Wind power supplies up to 0.1 per cent. of our national electricity needs. To reach the potential that is often talked about, which is in the region of 10 per cent. of the nation's energy, we would need between 30,000 and 40,000 wind turbines. That would occupy 1,500 square miles. It is not only a case of not in my back yard, but not in my front yard as well.
The Countryside Council for Wales said in its policy document on wind turbine power stations:
while they are welcomed as a source of renewable energy, the scale of their contribution to meeting energy needs does not justify overturning established planning policies and safeguards".

Sir Donald Thompson: I have no interest to declare. My hon. Friend will agree that the wind factories are blown. The biggest U-turn in politics this decade has been that by the Greens, the conservationists and the rest against wind farms. They are recognised as blights on the land.
My hon. Friend can frighten them away. He can be Don Quixote. We frightened them away from the Bronte moors by sticking to the truth and by putting the facts to the people, not by hiding behind the spurious figures and comparisons that are turned out by a business that is in the honourable profession of making money, but also in the dishonourable profession of irreparably scarring the landscape.

Mr. Evans: I am grateful to my hon. Friend, who is his own Don Quixote. I congratulate him on his success in preserving the natural beauty of his countryside. Up to now, the argument in favour of windmills has been dominant. People have been afraid to say that there is a downside to them. That is why I have initiated this debate.
Even Friends of the Earth, which recently wrote to me saying that the best way to stop pollution and save energy is to
turn off the light and the television set",
admits:
most of the best areas for wind energy, due to the high mean annual wind speeds, correlate with areas that have…landscape and conservation value.
Those are often beautiful areas.

Mr. Colin Pickthall: I thank the hon. Gentleman for introducing the subject in the way he has. Does he agree that the point is not so much the existence of wind turbines, which have an important part to play in renewable energy, as the problems that he mentioned with their location? To speak selfishly, that is especially true in his constituency of the uplands that form an important part of the landscape for many thousands of my constituents who live miles away from them. Does he agree that it is invidious to put the biggest windmills so far all the way down Kirby moor in south Cumbria, blighting an important landscape?

Mr. Evans: The hon. Gentleman makes an important point. It is not only people who live in such places who suffer from the visual impact of wind turbines. Thousands of people visit those places because of the beauty of the countryside. The last thing they need is industrial activity—and that is what it is—created by the imposition of wind turbine factories.
The siting of such turbines must be handled sensitively. That is one of the major reasons that I sought the debate. It is not only the responsibility of the Department of Trade and Industry but of the Department of the Environment to take action to review PPG 22, which has done some damage in respect of where turbines are to be sited.

Mr. Peter L. Pike: I am sure that the hon. Gentleman will have seen the wind farm at Cliviger, between my constituency and Calder Valley. It is in a most beautiful area, and is visible wherever one is in Burnley. The planners said that it would be possible to see it only in close proximity. It is very damaging, and further wind farms in our area would be unacceptable.

Mr. Evans: I totally agree with the hon. Gentleman. I know his strong feelings on the issue. One would have to have extremely impaired vision not to be able to see the windmills in his constituency.

Mr. Pike: They can be seen from your constituency.

Mr. Evans: Indeed, I can see them from mine. I know about his problems, and wish him well in any future fights to prevent further intrusion on the open countryside in his constituency.
Not only is the north-west suffering. In Scotland, there is a proposal for 37 turbines at Helmsdale. I have spoken to the hon. Member for Caithness and Sutherland (Mr. Maclennan), whose constituency includes Helmsdale. He has fought the proposal.
It is amazing that such an application has been accepted, particularly in the face of opposition from Scottish National Heritage, the community councils, local landowners, tenants, tourists and most of the local inhabitants. There is a very strong campaign. I understand that those 37 turbines would be visible from one of the most scenic stretches of road in the country. It would have a devastating impact in the area, and I hope that the Secretary of State for Scotland will use his power to look at the decision, and—hopefully—his good sense and judgment to overturn it.
As the hon. Member for Burnley (Mr. Pike) has intimated, some of the turbines are far taller than Nelson's column and can be seen for miles around. I agree with my noble Friend Lord Parkinson, who said about wind turbines when he was Secretary of State for Energy:
nobody could call them beautiful, in fact they are extremely ugly".
Lord Stoddart made the point succinctly when he said:
wind turbines are visually ugly and destructive of the landscape. The best way of obtaining energy is to conserve it.
When applications to erect wind factories have reached a public inquiry—there have been four to date—they have always been defeated, because the environmental impact has always outweighed the energy they produce.
Apart from the problems that I have already mentioned, there are also problems of noise and electromagnetic interference. The latter affects television signals, and people have to switch to cable television to overcome interference. Unfortunately, the noise problem is not so easily overcome. Mechanical noise has resulted in several turbines on a wind farm in Holland being stopped for eight hours each night due to complaints from neighbouring residents.
One victim of wind factory blight said in The Daily Telegraph a couple of years ago:
The 'thrump' of the blades and grinding gears is driving us to distraction. My kitchen amplifies these noises sickeningly. Since commissioning in July, the house has frequently vibrated with penetrating soundwaves. At night, these disrupt sleep, even when all the windows are closed. As I write, turbine droning is audible above the computer's hum. For my family and those in a similar plight on windfarm sites in Wales and Cornwall, there is a distressing human cost to this supposedly environmentally friendly electricity. For us, this is no brave, new, clean energy but a rapacious industrial giant.
Research in America, Japan and Germany predicts that people living within two miles of wind farms may have medical effects from infrasonic vibration. One person is the first in Wales to achieve a council tax reduction because the value of his house has fallen. The Select Committee on Welsh Affairs has even admitted that the noise is clearly disturbing and unpleasant, and may have some psychological effects. If we want the green and the peace, turbines are not for us.
Even such an authority as Jonathon Porritt wrote in The Daily Telegraph:
The modern wind turbine is a mighty intrusive beast. It's not into nestling, blending in or any of the other clichés so beloved of rural romantics
Of course turbines have to be obtrusive in the landscape, in order to catch the wind.
Turbines have also proved deadly to birds. A two-year study in California showed that 500 birds had been killed, including 78 protected golden eagles. Other studies have demonstrated that some of the more astute birds fly up to 500 m away from the wind turbines to avoid them, and therefore reduce their natural habitat. If it were not for the non-fossil fuel levy, skewing the price in favour of such a form of energy generation, nobody would touch it.

Mr. Dafis: Will the hon. Gentleman give way?

Mr. Evans: No, I am coming to the end.
Wind turbines are relatively inefficient, highly visible and extremely ugly. They scar the natural beauty of the countryside; they are a blot on the landscape. Their continuous noise—audible and subsonic—is extremely monotonous and unpleasant, and might cause health and psychological problems. Bird habitats are destroyed, and many birds are killed. Tourists dislike them, and residents suffer through lower property values. Infrastructure still has to be erected in the countryside first to direct and then to harness the energy produced. If it were not for the subsidy, we would not be buying their power.
What is in favour of windmills? There is the mythology that, somehow, there is no downside to the sticking of a few harmless windmills out of the way in remoteish areas where they will produce bounteous amounts of energy at no cost to anyone. I am afraid that that is tosh.
I ask the Minister to look again at fresh ways in which to conserve energy, and at research into improving the harnessing of wind energy, making it more viable, and giving more weight to local authorities so that they feel secure in saying no to unsightly turbines in the countryside—not only in areas of outstanding natural beauty or national parks, but areas abutting them. Many areas outside areas of outstanding natural beauty are still remarkably beautiful. If we are to persist with such turbines, we must get the siting right. If we do not, we will be guilty of ruining one of Britain's greatest assets: our green and pleasant land.

The Minister for Small Business, Industry and Energy (Mr. Richard Page): I thank my hon. Friend the Member for Ribble Valley (Mr. Evans) for giving us the opportunity to debate wind power. I also thank him and all hon. Members who are present for not falling into the obvious trap of saying how appropriate it is that politicians are discussing wind.
My hon. Friend's speech and the interventions in this very short debate show the interest in the subject. My hon. Friend will have noticed that there is not a completely unanimous view on wind power. I should like a much longer debate in future, because the matter is extremely important and valuable to our country and our economy.
My hon. Friend raised the specifics of wind power. It is a major part of the renewable energy scene. In supporting renewable energy, the Government are committed to the principle of sustainable development, and make it the touchstone of their policies. If my hon. Friend has some idea that the Government will walk away from the idea, he is doomed to disappointment.
Government policy is to stimulate the development of new and renewable energy sources, including wind energy, whenever there is the prospect of it being economically attractive and environmentally acceptable, to contribute to the diversity, security and sustainability of energy supplies. My hon. Friend rightly referred—if he did not mention it, I certainly would—to the reduction in the emission of pollutants.
In doing that, the Government have to take account of what influences business competitiveness. We are working towards 1, 500 MW of declared net capacity of the new electricity generating capacity from renewable sources by 2000. That broadly sets out the Government's objectives. The principal instrument for achieving that 1,500 MW by 2000 is the making of orders under the non-fossil fuel obligation—with parallel arrangements, as everybody knows, in Scotland and Northern Ireland—that goes under the name of NFFO. That makes it sound like some sort of toffee bar, but I think that everybody knows what it stands for. It is a considerable success, of which the Government can be rightly proud.
Already, more than 330 MW of declared net capacity is operational, of which, as my hon. Friend the Member for Ribble Valley has said, about 66 MW comes from wind. There are 37 wind projects, including 28 wind farms, operating in the United Kingdom. I am very pleased with the progress made in that direction. It shows that the Government have been right to give some support to the wind industry to enable it to gain a footing.
To justify that confident support, the industry has had an opportunity to show its skill and enterprise. The Government announced a fourth renewable order in England and Wales in November 1995 for another 400 MW, which will help us towards the target of 1, 500 MW. There are also proposals under SRO-2 for an expected 70 to 80 MW of new capacity in Scotland, and for 45 MW of new capacity in Northern Ireland under the NI-NFFO 2 order. These are aims and the objectives of the NFFO programme.
I have been most encouraged by the response to the NFFO orders, which expresses the enthusiasm and commitment to an emerging industry. The industry is not just about providing energy for this country from renewable sources, as there are other areas of activity that

can help this country. I wish to talk in a moment about the export and manufacturing capacity created in this country through the NFFO orders.
My hon. Friend the Member for Ribble Valley calculated that the city of Birmingham would need to be covered with wind farms if we were to reach the 10 per cent. energy level. I must assure him that the Government have no intention of turning the city of Birmingham into a wind farm—the wind levels there are not quite sufficient. Nevertheless, we must remember that, if we were to move towards that 10 per cent. level, we would reduce the pollutants coming into this country from carbon sources by 8 million tonnes of carbon. That is an immense amount of pollutant, and it cannot just be lightly tossed to one side. The 10 per cent. figure is the maximum practical response that can be achieved, but would require, I understand, some 1 per cent. of the UK's land area to bring that about.
The export potential of wind energy is considerable. It is estimated that about 50,000 wind turbines, representing 22,000 MW of electricity generating capacity, can be built in the next 10 years, and that the business is worth £11 billion. In Britain, the NFFO programme has created success stories. The packed Gallery up there ensures that such success stories receive no publicity in the press.
For example, a company called Airlaminates is selling wind turbine blades around the world, and its orders in 1995 have exceeded £2.3 million. Coupe Foundry Ltd. in Preston has won some £2 million of orders to supply the major components of a German wind turbine. McNulty Offshore in South Shields recently won an order to supply 30 towers, with a value of more than £2 million, for a wind farm in Scotland. Aerapack Ltd. is planning to go ahead with a factory in Scotland to manufacture complete wind turbine blades. I wonder whether the workers in those factories would want wind energy to be tossed to one side, following the rather draconian measures advocated in some quarters.
Progress ultimately depends on developers' abilities to find sufficient sites that are acceptable in planning terms, particularly from the point of view of noise and visual impact. I must emphasise that the holding of a NFFO contract does not confer any special presumption in favour of gaining planning consent.

Mr. Dafis: Will the Minister give way?

Mr. Page: With respect, I want to put on record the planning process, and I literally have only a few minutes to do so. Today's debate is not long enough to do the subject sufficient justice.
In view of the comments of my hon. Friend the Member for Ribble Valley, I thought that it would be helpful to set out some of the planning arrangements in detail. The Government recognise that renewable energy is different from fossil and nuclear forms of generation, in that they are decentralised and small scale. Hence they differ in land use and other material planning considerations.
In considering this, the Government issued specific planning guidance on renewable energies, PPG 22, in February 1993. PPG 22 reiterates the fundamental principles of planning, and deals with particular issues raised by renewables. It states that planning decisions


have to reconcile the interests of development with the importance of conserving the environment—the issue at the heart of sustainable development. Specifically in relation to energy, it states that the Government's general aim is to ensure that society's needs for energy are met in a way that is compatible with the need to protect the environment, both global and local.
PPG 22 says that planning authorities must weigh carefully the Government's policies for developing renewable energy sources with those for protecting the environment, and draws particular attention to those relating to the countryside, PPG 7, and the coast, PPG 20. PPG 22 states that planning applications should be determined in accordance with the structure plans of the county council and the local plans of the district councils. Those plans are required to include policies for conserving wildlife and the natural beauty and amenity of the land. PPG 22 also requires that they now take account of the Government's policy on renewable energy.
Although we have had a quick gallop through the subject, I hope that the House will return to it in the fulness of time in much greater detail, because it is of immense value to our society. I am not sure whether my hon. Friend the Member for Ribble Valley's parallel with Don Quixote is a good one, and perhaps he should not use it in the future. If I remember rightly, Don Quixote had a fairly chequered career, most of which was completely and utterly unsuccessful. Wind power is here to stay, and we must make sure that it is introduced in a sensitive fashion.

It being six minutes to Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Sitting suspended, pursuant to Standing Order No. 10 (Wednesday sittings), till half-past Two o'clock.

PRIVATE BUSINESS

UNIVERSITY COLLEGE LONDON BILL

Order for consideration read.

Considered; to be read the Third time.

Oral Answers to Questions — SCOTLAND

Beef

Mr. Kirkwood: To ask the Secretary of State for Scotland when he expects to meet the Scottish National Farmers Union to discuss problems in the beef industry associated with bovine spongiform encephalopathy; and if he will make a statement. [26048]

Mr. Jacques Arnold: To ask the Secretary of State for Scotland what discussions he has had with representatives of the beef industry in Scotland. [26052]

Sir Hector Monro: To ask the Secretary of State for Scotland what recent discussions he has had with the National Farmers Union of Scotland concerning beef production; and if he will make a statement. [26061]

The Secretary of State for Scotland (Mr. Michael Forsyth): Scottish Office Ministers have regularly met representatives of the Scottish National Farmers Union over recent weeks and I have established an industry group which regularly meets my senior officials.

Mr. Kirkwood: Will the Secretary of State acknowledge that urgent practical steps need to be taken now so that consumer confidence can be won back and the European ban lifted? Will he therefore consider the possibility of ensuring that the cattle disposal scheme is fully available throughout Scotland by the end of this week, and will he use his influence with the intervention board to try to get more beef out of the system north of the border? In addition, will he consider the possibility of relaxing some of the rules of the special beef premium scheme so that more cattle will be eligible for the subsidy and of waiving the scaling back of the financial limit on the scheme for 1995? If he does not do so, in six months there will be no beef industry to save.

Mr. Forsyth: I agree with the hon. Gentleman about the importance of lifting the beef ban, and I hope that he and his colleagues, who have been such enthusiasts for passing more power to Brussels, will learn from this experience.
With regard to the proposals that he has put forward, I will ensure that they are drawn to the attention of my right hon. and learned Friend the Minister of Agriculture, Fisheries and Food. My right hon. and learned Friend and I have been determined to take measures as speedily as possible, and we have been guided in our conduct of policy by the splendid way in which the farming unions have spoken for the industry as a united industry and have worked with others who have an interest in the matter.

Mr. Arnold: Is my right hon. Friend aware that farmers throughout the country bitterly resent the proposal by bureaucrats in Brussels for a holocaust of British cows in response to the panic of the German housewife? Is it not an irony and a tragedy that the panic about British beef

was started in this very House by the irresponsible scaremongering of the hon. Member for Peckham (Ms Harman)?

Mr. Forsyth: I agree with my hon. Friend about the considerable concern throughout the United Kingdom about the impact of this unjustified ban on British beef. I also agree with what he says about the hon. Member for Peckham (Ms Harman), but I would exempt from that criticism the hon. Member for Hamilton (Mr. Robertson) and his colleagues, who were rather more restrained in their response and did not, in my view, contribute to some of the hysterical coverage which came as a result of the hon. Member for Peckham trying to make political capital. I hope that that will not embarrass the hon. Member for Hamilton.

Sir Hector Monro: Will my right hon. Friend accept that everyone appreciates very much the work that he and Lord Lindsay have done to resolve this problem? Will he answer two questions? First, as the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) asked, will he implement the disposal scheme as quickly as possible, particularly in relation to slow-maturing cattle? Secondly, will he say something about exporters of beef, who are in desperate trouble along with the farmers?

Mr. Forsyth: The 30-month scheme will be in operation tomorrow, and steps are being taken to get information out to producers so that they are aware of the system. On exports, my right hon. Friend is absolutely right to point out their crucial importance to Scotland's beef industry. We produce very high-quality beef products, and we have worked for years to develop those export markets. The position is similar in Northern Ireland. It is very disappointing to see the stress that is being placed on those sections of the industry that have done so much for British interests in the past. I am currently considering, with my right hon. and learned Friend the Secretary of State for Northern Ireland, what measures we can find to help those who are dependent on the export trade, and how to take account of the specific circumstances of exporters.

Mr. Dalyell: Does the Secretary of State regret in any way his statement at Inverness that the scientific committees in the European Union were under political direction?

Mr. Forsyth: I neither regret it nor retract it. The fact is that it is there for all to see. Our scientific advice states that there is no justification whatever for the ban on British beef, and the World Health Organisation has taken the same view. It is quite sad to see the way in which people who should be free to take a professional view are at variance with the view of every major global authority. In my view, that is because they are acting under political direction from member states, which have no justification for keeping British beef out of their markets other than their own commercial interests.

Mr. Hood: Having visited Luxembourg this week, met judges in the Court of Justice and been told that no complaints have so far been lodged with the Court of Justice by the National Farmers Union, the Government or, indeed, any exporter against the ban on beef, can the


Secretary of State tell us when the Government intend to put their complaint to the Court of Justice, as they have previously told the House that they would?

Mr. Forsyth: My right hon. and learned Friend the Minister of Agriculture, Fisheries and Food will make a statement to the House later today. As Opposition Members would expect, the Government will be as good as our word, and we shall pursue our legal action very swiftly.

Mr. Bill Walker: My right hon. Friend will be aware that every sector of the beef industry has been affected. Can he confirm that when the culling process is in operation, no one sector will have an advantage—for example, the abattoirs will not have an advantage over the auction marts—so that the pricing structures that have been arranged to compensate will take care of that matter?

Mr. Forsyth: I am not sure that I can answer my hon. Friend's question in precisely the terms that he would like. I can tell him that no one will gain any advantage from this catastrophe, which has blighted our industry. The blame for the difficulties that our farmers and meat industry currently face rests four square with Brussels. The sooner Brussels lifts the ban, the sooner those people will be able to go about their legitimate business—as they ought to be able to do under the terms of the single market.

Mr. Wallace: When the Minister of Agriculture made a statement in the House on 16 April, he said that the Government were considering ways in which there might be some exemption from the 30-month slaughter for specialist herds which take longer than 30 months to mature. That statement was welcomed on both sides of the House. When some colleagues and I visited the Commission in Brussels last week, we found that it was responsive to such a measure and thought that it might be one step towards lifting the export ban; yet it had received no proposals from the British Government. Can the Secretary of State tell us when the Government will present such proposals?

Mr. Forsyth: The hon. Gentleman is mistaken to suggest that the British Government have not put proposals to the Commission for the lifting of the ban. The hon. Gentleman heard what my right hon. and learned Friend the Minister of Agriculture said in his statement to the House. Of course we wish to see exemptions from the 30-month rule in respect of slow maturing cattle such as Galloways and Highland cattle, and that is a matter that we continue to pursue. The hon. Gentleman must not lose sight of the fact that the ban on British beef of whatever kind is not justified. That remains our position and we shall continue to argue that case while also arguing for the widening of the exemptions to which my right hon. and learned Friend the Minister committed himself in the House.

Mr. Neil Hamilton: The German Chancellor has proposed a final solution to the BSE problem which involves the unnecessary slaughter of a large part of the British national herd and he has been warmly supported by many of our European competitors. As the right hon. Member for Sedgefield (Mr. Blair) has said on many

occasions that he would not wish to be isolated in Europe, does not the logic of his position mean that he would have to support the German Government rather than the interests of the British people?

Mr. Forsyth: I agree with my hon. Friend to the extent that Opposition Members who are so keen to give more power to the Community will find it extremely difficult to explain in their constituencies how their policy is consistent with standing up for British interests. There has never been an occasion on which British interests have been more threatened. It is important that the ban is lifted.
On the point about the public statements that have been made by leading figures in Europe, I agree with my hon. Friend that it is difficult to understand how people can say that they eat British beef and believe that it is safe and yet continue to go along with a proposal to exclude it from the Community. I do not often agree with the Daily Record, but it is absolutely right to bring that message home to the people of Scotland. I understand that it has approached a number of leading figures in Europe, all of whom have taken the same view on British beef. It is high time we saw action which reflects their view and which allows our farmers and producers to go about their daily business.

Mr. Salmond: Does the Secretary of State agree that the best way to help the exporters of Scotland and Northern Ireland is to get their beef back on to the European market? With that in mind, has the Secretary of State read early-day motion 773, tabled by the hon. Member for East Antrim (Mr. Beggs) and now signed by 79 hon. Members on a cross-party basis, which argues that the way to go forward is to get the quality-assured, naturally fed beef from Scotland, Northern Ireland and elsewhere back on to European markets?
Given the indications of support for that approach from European farming ministers and the fact that the motion has been signed by the hon. Members for Ayr (Mr. Gallie) and for Eastwood (Mr. Stewart), will the Secretary of State retract his dismissal of that attitude, start arguing the case for Scottish beef and stop putting his unionist politics before the livelihoods of my constituents?

Mr. Forsyth: I will continue to argue the case on behalf of the Scottish industry and to take advice from that industry. The Scottish industry's advice is clearly that we should argue for the ban to be lifted and that we should not seek to divide the industry. If those involved in the Scottish farming industry—they are the people whose livelihoods and work are on the line—change their position, we will take account of that. The hon. Gentleman will have to do more to satisfy the people of Scotland than try to play politics with this issue. I am sure that they will take note of the fact that, at a time when our industry is being savaged by this ban, he thought it appropriate to put a European star on his party's logo.

Mr. Jessel: Does not the consumption of British beef—Aberdeen Angus beef—by Chancellor Kohl at No. 10 Downing street make absolute nonsense of the European Union's ban on British beef, which it pretends is being imposed for health reasons?

Mr. Forsyth: I agree with my hon. Friend: seeing is believing. The President of the Commission, Chancellor Kohl and the Commission have indicated by their actions that they believe that British beef is safe. We now want to see the Commission and the Community act accordingly so that our people can get the benefit of what we were promised when we joined the European Union—access to a single market.

Mr. George Robertson: The Opposition accept that there should be a lifting of the European ban on British beef as soon as possible. We agree with that position as strongly as the Secretary of State does. However, does he recognise that, if the Conservative party continues to treat this issue as part of the battleground of European politics which is tearing that party apart, it will hinder our chances of persuading our European partners of the strength of our case?
The crisis did not start in Brussels. It started as a result of an announcement by the Government on the link between bovine spongiform encephalopathy and Creutzfeldt-Jakob disease. Public reassurance will return only when there is an agreement on the effectiveness of actions to eliminate BSE from our cattle. How can people be reassured on this issue when the arrangement to dispose of the carcases of cattle more than 30 months old has become a shambles all over Britain this week?
The Opposition have taken a constructive attitude because a huge Scottish industry is at stake and thousands of jobs are in peril. Practical steps have to be taken to reassure the public across Europe. If those practical steps are taken, we will support them. At the end of the day, the Government must govern and they will be judged.

Mr. Forsyth: The hon. Gentleman took a long time to say that action must be taken, but he did not put forward a single proposal. That is typical of what we have come to expect from the Labour party. The hon Gentleman believes that the Labour party's approach on Europe is in Britain's interest. I point out to him that the beef ban has been imposed by qualified majority voting-and the Labour party wishes to see more qualified majority voting in Europe.

Several hon. Members: rose—

Mr. Kirkwood: On a point of order, Madam Speaker. In view of the totally unsatisfactory nature of the Minister's answer, I give notice to the House that I will seek to raise the matter on the Adjournment.

Madam Speaker: Order. In that case, I am not able to call Mr. Gallie and I must close the question.

Veterinary Scientists and Technicians

Mr. Eric Clarke: To ask the Secretary of State for Scotland how many veterinary scientists and technicians were made redundant in the past year, 1995–96, in Scotland; and how many of these redundancies were followed by withdrawal of Government grants. [26051]

The Parliamentary Under-Secretary of State for Scotland (Mr. Raymond S. Robertson): The information that the hon. Gentleman has requested is not held centrally.

Mr. Clarke: I am surprised at the Minister's answer, as I have been co-operating with him to try to get the answers I want. As a result of the bovine spongiform encephalopathy situation, a number of scientists—including my constituents Dr. Melrose and Mrs. Margaret Clark, who are scientific technicians—have been made redundant due to Government cuts. I believe that they should be employed. The area that I come from is renowned for scientific excellence and veterinary research. A review of 35 of these institutions throughout the United Kingdom is currently under way. The confidence of the people involved is low because the Government have withdrawn their grants.

Mr. Robertson: I am grateful to the hon. Gentleman for giving me notice of his question with regard to his constituents. That is an indication of how seriously he takes this issue. The Overseas Development Administration has a contract with the university of Edinburgh for the provision of certain research services. However, it is up to the university to decide how it delivers the service and the number of research staff it needs to do so. The number of staff will vary according to the nature of the research at any particular time.
I emphasise that the ODA—and therefore the Government—is not the employer. That is a matter for the university. Individual contract staff who have a grievance about their employment should pursue the issue with the university, which may then decide to take the matter up with the ODA. If the hon. Gentleman has any further information that he would like me to pass on to the ODA, I shall be delighted to do so.

Mr. Gallie: Does my hon. Friend agree that the use of veterinary and other scientists in the United Kingdom goes beyond that of other countries in relation to food hygiene and ensuring the safety of the public in general? On that basis, does he not despair that the sound advice given by scientists in our country that British beef is safe is ignored by scientists elsewhere, who do not carry out tasks at similar levels with the same degree of responsibility in their own countries?

Mr. Robertson: My hon. Friend raises a valuable point. This year, the Government are spending more than £9 million on research into bovine spongiform encephalopathy and Creutzfeldt-Jakob disease, and the amount will be increased to £10 million next year. As my hon. Friend said, all the scientific advice available from the world's experts is to the effect that British beef is safe. As my right hon. Friend the Secretary of State has so eloquently said, the ban should be lifted.

Dr. Bray: Is the Minister aware that the closure of research institutes and the dismissal of research teams goes far wider than that? The prior options study is cutting a swathe through Government research establishments and greatly weakening the efforts in Scotland. Is he further aware that the progress of scientific research, which underlies the ability to tackle diseases such as BSE and CJD, depends critically on the underlying basic research, which has been savaged by the Government?

Mr. Robertson: The hon. Gentleman does himself no credit with his wilful scaremongering. The prior options review of the research establishments is no threat to the


marvellous work done in the United Kingdom. The Government are fully committed to supporting the excellence of the UK science base, and we are spending more than £6 billion per annum on science and technology.
However, the research establishments cannot be immune from regular review and appraisal, and there is a need to ensure that research is being conducted in the most effective manner, providing the best value for money. With his background, the hon. Gentleman should be praising what is going on in this country, not seeking to run it down and trying to score cheap party political points.

Drug Abuse

Mr. Michael J. Martin: To ask the Secretary of State for Scotland what steps he is taking to deter drug abuse in Scotland; and if he will make a statement. [26054]

The Minister of State, Scottish Office (Lord James Douglas-Hamilton): On 7 May we are launching a new all-party drugs campaign, which will build on the significant progress that has been made in implementing the recommendations of the ministerial drugs task force report.

Mr. Martin: Every mother and father heaves a sigh of relief when their child joins a youth club, because when they are in the youth clubs they are off the streets and away from the drug pushers. Will the Government give every encouragement to local authorities and the voluntary sector by helping such organisations? People in my community and throughout Scotland are also sickened to see those who are making money from drugs buying up land, public houses and taxi companies and many other so-called legitimate organisations. May we hope that the courts will not only sentence those people harshly but take away their ill-gotten gains?

Lord James Douglas-Hamilton: I agree whole-heartedly with everything that the hon. Gentleman has said. We have passed into legislation measures to the effect that the proceeds of drug trafficking should rightly be confiscated. That provision is in place, and that is now happening in Scotland. Youth clubs need to be strongly supported, as the hon. Gentleman said, and I am glad to confirm that the all-party campaign will build on, not replace, the drugs task force work already under way. As the hon. Gentleman knows, the drug action teams are very active in and around his constituency. Many measures have been put in place, and we intend to advance them in a co-ordinated manner.

Mr. Bill Walker: What measures will my hon. Friend introduce to tackle the problem that arises when senior social workers make comments that are unhelpful to the all-party campaign? There is no doubt that the great advantage of the all-party campaign has been its all-party basis, and it is making progress.

Lord James Douglas-Hamilton: I think I know what my hon. Friend is referring to, and I am glad to note that the person concerned subsequently acknowledged that

drug misuse was illegal and unsafe, and declared that she would never condone the taking of Ecstasy or any other drug. [Interruption.]

Madam Speaker: Order. There are a lot of arguments across the Floor of the House. Has the Minister completed his answer?

Lord James Douglas-Hamilton: It was impossible for me to hear what the hon. Member for Dundee, West (Mr. Ross) was saying, but I shall be only too happy to answer him.

Madam Speaker: The hon. Gentleman did not ask the question. It was asked by someone else. Has the Minister finished? If he has, I will call Mr. Davidson, who very seldom gets called.

Mr. Davidson: Thank you, Madam Speaker. I am particularly glad to be called today as this programme appears on Scottish television, although my mother, who resides in Galashiels, will not be able to see it because Border Television does not carry the programme.
Does the Minister agree that, in the fight against drug dealers, the police are greatly handicapped because, when they catch people for offences and charge them, those people are often quickly back out on the streets, either because the procurator fiscal's department does not oppose bail or because the courts grant it far too readily? In my constituency, there are many youngsters running around who have committed serious offences with knives. They are released and can then offend again. Such occurrences demoralise the police and the public. What does the Minister intend to do about that?

Lord James Douglas-Hamilton: I shall certainly look into the matter, although it comes within the responsibility of the Lord Advocate. The hon. Gentleman will be aware that guidelines have been issued to procurators fiscal, especially in relation to restricting bail. If the hon. Gentleman will give me the names and examples, I will ensure that the matter is followed up speedily with the Law Officers.

Forestry

Mr. Pawsey: To ask the Secretary of State for Scotland how many staff in his Department are involved in the administration of forestry, and at what cost. [26055]

The Parliamentary Under-Secretary of State for Scotland (Mr. George Kynoch): The Forestry Commission currently employs 3, 600 staff throughout Britain, at an annual cost of £66 million.

Mr. Pawsey: I thank my hon. Friend for his typically helpful, detailed and comprehensive reply. Given the amount of resources being made available within the Scottish Office for United Kingdom forestry, does my hon. Friend feel that it might be wise to transfer those responsibilities to the Department of the Environment?

Mr. Kynoch: I am not sure that I heard my hon. Friend correctly. My hon. Friend's interest in forestry matters is well logged. Under Scottish Office guidance, forestry is


faring exceedingly well. The Forestry Commission is looking for significant efficiency improvements in its manpower and expects to achieve a reduction of about 10 per cent. in staffing over the three years from 1994. Perhaps Labour-controlled local authorities in Scotland could learn from that.

Ms Roseanna Cunningham: What effect will the right of pre-emption have on the Government's plans for forestry in Scotland, given that it is likely to cause great difficulties in the transfer of crofting estates? Do the Government intend to introduce legislation to remove that feudal remnant from our past?

Mr. Kynoch: The hon. Lady will be aware that a consultation document on crofting has been issued. All the matters will be raised when the results of that consultation are known.

Police Officers (Protective Clothing)

Mr. David Shaw: To ask the Secretary of State for Scotland what progress is being made with research into protective clothing for police officers, and if he will make a statement. [25056]

Mr. Michael Forsyth: A £100,000 research project, largely funded by my Department, is currently under way at the university of Strathclyde. It will, I hope, pave the way for the development of a lighter vest to protect police officers against stabbing attacks.

Mr. Shaw: I welcome the news that the Government have made that finance available. Will my right hon. Friend confirm that that was possible because police funding in Scotland is ring-fenced? Does he accept that the issue of drug abuse, which was raised earlier, is connected with our ability to protect the police from stabbings and other threats to the body, and that protective clothing is clearly necessary in such circumstances?

Mr. Forsyth: I am grateful for my hon. Friend's words of welcome. Police funding is not ring-fenced in Scotland. Funding for that particular project came from central funds, from my budget, following representations made to me last year by the Police Federation. I strongly believe that we have a duty to ensure that our police on the streets are equipped with all the means we can find to protect them when carrying out their difficult duties.

Mr. Charles Kennedy: On the subject of protective clothing, will the Secretary of State ensure that his research also takes into account the findings from last night's incident, when the police and others in the vicinity of the Skye bridge were placed at risk due to explosive material left behind by the developers? The material had to be safely taken care of and detonated at a nearby quarry. The Minister of State spoke to me about the matter over the telephone this morning, and there is local anxiety that the inquiry for which the Scottish Office has called is to be carried out by the company and not by the police. No individual would get away with that, so why should the company?

Mr. Forsyth: If indeed it turns out that the blasting explosives were left by a subcontractor, that is not the

same as the company doing it. I am sure that the hon. Gentleman is aware of the distinction. I understand that the main contractor—the company—is inquiring into how the explosives were left behind. As the hon. Gentleman pointed out, it is a serious matter. Fortunately, no one was hurt, and I am sure that the whole House is grateful for that. When the company has produced a report, we shall consider whether further steps are necessary.

Mr. Stephen: Will my right hon. Friend confirm that, in the current year, Scottish local authorities will receive an increase of 7 per cent. in the police grant which will enable them to equip police officers even better than at present? Does he recall that, when Labour left office, the Scottish police service was undermanned and underpaid, and experienced police officers were leaving in droves?

Mr. Forsyth: My hon. Friend is correct. We are determined to see more policemen on the beat and we have provided more resources in the public expenditure survey round to facilitate that. Although we never anticipate succeeding PES rounds, I am happy to confirm to the House that the police will again be a priority in the next PES round.

Mr. McFall: The Opposition welcome the funding of research into protective clothing, which is necessary, in part, because of the Government's complacency about law and order. Since the Conservatives came to power, the number of recorded crimes has more than doubled, to almost 1 million per year. Despite the Minister's warm words, the culture of knives prevails in society, with increases in the number of offensive weapons crimes, violent assaults and drug-related crimes. Is it not clear that the soundbite politics that is cheered at Tory party conferences does not help to solve the problem? The message is that today's streets are more dangerous than ever before because of Conservative law and order policy. When will the Secretary of State do something to assist beleaguered communities?

Mr. Forsyth: The hon. Gentleman is looking increasingly ridiculous. He speaks for a party that has opposed virtually every measure that we introduced to make life tougher for the criminal. In recent days, he criticised me for calling for longer sentences for criminals and for more prisons to put them in. If we are to have safe streets, we must lock up the criminals. The hon. Gentleman and his party oppose that policy.

Tourism

Mr. Simon Coombs: To ask the Secretary of State for Scotland what recent measures he has adopted to promote tourism in Scotland. [26057]

Mr. Kynoch: My right hon. Friend has increased the resources made available to the Scottish tourist board this year by £3 million, or 20 per cent.

Mr. Coombs: I am grateful to my hon. Friend for that most encouraging information. Is he able to reveal the financial and the commercial success of last year's Autumn Gold campaign? I understand that the marketing campaign resulted in a substantial number of inquiries, but


was it a success financially? What support do the newly established local tourist boards receive from local authorities throughout Scotland?

Mr. Kynoch: My hon. Friend, who takes a great interest in tourism matters, is absolutely right: Autumn Gold has been a remarkable success in its early stages in seeking to extend the tourist season in Scotland. Some 37 per cent. of those who requested an Autumn Gold pack then took an autumn break in Scotland in October and November 1995, which was an increase on previous seasonality campaigns. I am sure that the campaign has contributed to the 11 per cent. increase in the number of tourists from England who visited Scotland in 1995.

Mr. Maxton: Does the Minister agree that local authorities play an essential role in maintaining our tourism industry, by providing funding for the arts, halls, museums and recreation areas as well as by enforcing health and safety standards in our hotels and restaurants? Does he further agree—as he is nodding—that the swingeing cuts that he and the Secretary of State have imposed on local authorities will damage our tourist industry?

Mr. Kynoch: I agree with the first part of what the hon. Gentleman said, but I disagree totally with the second part of his question. The hon. Gentleman does not seem to have got it into his head that this year the Government have provided an extra 3.7 per cent. of local government funding. In addition, most local authorities have increased their council tax far in excess of inflation—there have been 10, 12 and 15 per cent. increases, and some were even greater. Therefore, local authorities have more than enough resources to spread around the services.
I hope that local authorities play their due part in the partnership that is needed in tourism to ensure that their areas are promoted. Tourism is important to small and medium-sized business. It makes a considerable contribution to the Scottish economy, and local authorities have a significant part to play in encouraging it.

Mr. Stewart: Is it not a matter of concern to my hon. Friend that so many tourists visiting Scotland go to Edinburgh, where they encounter one of Scotland's leading slums called Prince's street and sit around in the virtually permanent traffic jam there? Does he agree that it would be better for Scotland if tourists were encouraged to visit the city of Glasgow, which has superb facilities, thanks to the partnership between the public and private sectors? While they were there, they could also visit the superb facilities in Rouken Glen park in Eastwood.

Mr. Kynoch: My hon. Friend is always a staunch supporter of his part of the world, but I hasten to add that there is a much larger section of Scotland north of the central belt. I would like all tourists to Scotland to experience the benefits of the entire country. I was particularly pleased that, recently, the Scottish tourism co-ordinating group which I chair discussed ways of getting tourists to travel further afield in Scotland.
My hon. Friend is absolutely right: most tourists visit Edinburgh. There are many reasons why they should go further north. Some airlines, particularly Ryan Air and Easy Jet, are considering taking favourable fares for tourists further north. I hope that we shall be successful

in our campaign, because much of Scotland's heritage, history and countryside, which are of great benefit to tourism, is further north.

Mr. Malcolm Bruce: Following on from what he has just said, does the Minister acknowledge that, although it is fine to promote attracting visitors to Scotland, they need information on the ground? In the light of that, the cuts in local government support for tourism have reduced the number of information centres: there are now no information centres whatsoever between Aberdeen and Fraserburgh since the closure of Ellon, Turriff and others. In those circumstances, does the hon. Gentleman recognise the need to increase funding, to provide local information centres? That will ensure just what he wants—tourists visiting all parts of Scotland, not just the capital.

Mr. Kynoch: I am surprised that the hon. Gentleman has the cheek to raise that question here, as he is referring to the action of the Liberal Democrat administration in Aberdeenshire and the Labour-controlled Aberdeen city council, which decided to reduce their funding of the new area tourist board. I hasten to point out that central Government, through the Scottish tourist board, have put an extra £700,000 into the area tourist board network.
It is for local authorities to decide their own priorities. Aberdeenshire has been given more money than ever before and has certainly increased the council tax by some 20 per cent. across the area, yet it has decided not to give as much to the area tourist board. If local authorities decide not to make tourism a priority, they must be accountable to their electorates. I hope that the Liberal Democrats will stand up and be counted.

Mr. Foulkes: Has the Minister seen the report in The Herald today on the threat to tourism in my constituency from the sludge dumped in the Clyde in the 1970s and 1980s containing dangerous chemicals that are now being dispersed throughout the firth? Why has he kept the marine laboratory's report secret? What action are the Government taking to protect public safety and ensure that there are no threats to tourism in Ayrshire and beyond?

Mr. Kynoch: I have not seen that article in The Herald, but I shall draw it to the attention of my hon. and noble Friend Lord Lindsay, the Minister with responsibility for the environment and for the new Scottish Environment Protection Agency, which I am sure will be interested in looking into the matter.

Thomas Campbell and Joseph Steele

Mr. Wray: To ask the Secretary of State for Scotland when he will make his decision regarding a review of the Thomas Campbell and Joseph Steele case. [26058]

Lord James Douglas-Hamilton: Once consideration of this case is completed, a decision will be announced.

Mr. Wray: Does the Minister agree that, under section 124 of the Criminal Procedure (Scotland) Act, due to come into force on 1 April 1996, the Secretary of State for Scotland will be allowed to refer this case? The families of Thomas Campbell and Joseph Steele think it unjust that a conviction was obtained on the basis of


evidence from a perjurer who was known by the procurator fiscal and by a Queen's counsel to be lying.
A fortnight before the trial of the Doyle murderers, he had stated that he was living with his sister and never left the house between Friday and Sunday. A fortnight later, he gave evidence to the effect that he heard the relevant conversation. He is now saying that he conspired with the police—

Madam Speaker: Order. The hon. Gentleman should ask a question.

Mr. Wray: The man is now saying that he conspired with the police and the procurator fiscal.
We want justice for this family. Will the Secretary of State bring section 124 of the Act into operation?

Lord James Douglas-Hamilton: Some of the petitions received raise difficult and complex issues of law and judgment, requiring careful and detailed consideration. This may involve interviewing witnesses and commissioning expert reports. Most petitions are dealt with quickly; in some cases, it takes a considerable time to complete the detailed examination which the matters raised in the petition require. I can, however, give an undertaking that these matters will be looked at thoroughly and rigorously.

Care Services

Sir David Steel: To ask the Secretary of State for Scotland what extra resources he plans to make available to local authorities to carry out responsibilities designated by his circulars (a) under the Carers (Recognition and Services) Act 1995 and (b) in increasing inspection of residential nursing homes. [26060]

Lord James Douglas-Hamilton: No extra resources are required.

Sir David Steel: I am astonished by that reply. Since the financial settlements were reached with local authorities, six circulars have been sent out to social work departments imposing new responsibilities on them—one of them only today. Some of them are perfectly sensible, such as the requirement to inspect nursing homes twice, not once, a year, but no new resources have been attached to the circulars. May I plead with the Minister, therefore, that no circular should in future be sent to local authorities without the accompanying cash to enable them to carry out their new duties? Without that, undesirable cuts will be made elsewhere, such as in the home help service in the borders area.

Lord James Douglas-Hamilton: Many circulars confirm good practice and give appropriate guidance without involving extra funds. Borders council has £14.5 million for its community care responsibilities; that is an increase. The Carers (Recognition and Services) Act 1995 stresses good practice; the guidance does not require more funding.
The guidance on local inspection of residential and day care services does not impose significant additional burdens on local authorities but does provide up-to-date guidance. That is why additional funds are not being awarded—they are not required.

Sir Hector Monro: Does my hon. Friend agree that £662 million for community care in Scotland this year is

a substantial sum? Does he further agree that many elderly folk are pleased that the Chancellor, in his Budget, increased the capital sum below which support has to be provided for residents in these homes?

Lord James Douglas-Hamilton: My right hon. Friend is absolutely right. There has been an increase of £41 million on the 1995–96 settlement. It is for authorities to establish their expenditure6/9/2006 priorities.

Ms Rachel Squire: In this National Carers Week, does the Minister agree that it is completely unacceptable that young carers in Scotland are not to have a statutory right to an assessment of their needs, unlike young carers in England and Wales? Will he further agree that this is another example of the Government saying one thing and doing another? Other hon. Members and I understood the Minister to promise, during the debate on the Bill on the Floor of the House, that Scotland's young carers would have such a legal right to an assessment of their needs.

Lord James Douglas-Hamilton: The Government strongly supported the Carers (Recognition and Services) Bill during its passage through Parliament. Differences with the English provisions will not significantly disadvantage carers in Scotland. The guidance that we are giving encourages more co-ordinated, better-quality respite care services. We are encouraging local agencies to provide appropriate support for carers.

Travellers' Children

Mr. Galloway: To ask the Secretary of State for Scotland if he will meet the Scottish Showmen's Guild to discuss the education of the children of Scotland's travelling people; and if he will make a statement. [26064]

Mr. Raymond S. Robertson: Neither my right hon. Friend nor I have had any request to meet the Scottish Showmen's Guild to discuss the education of the children of Scotland's travelling people. Our policy is to promote equal opportunities in education, including education for travellers' children.

Mr. Galloway: The guild is desperate to meet the four Scottish Office Ministers who are taking their place on the coconut shy in the fairgrounds these days because of the savage cuts in local government funding that they have imposed. The cuts have led to the imperilling of Whiteinch primary school in my constituency, where the travelling people send their children. Is the Minister aware that Whiteinch is the most popular primary school in Britain for the children of travelling people because of the hospitable welcome that they have been given there by the staff and by other pupils? Would it not be a tragedy if the school were to close as a result of the mean, tight-fisted settlement that the Government have reached with Glasgow city council, which has made such dreadfully painful choices necessary?

Mr. Robertson: The hon. Gentleman is on the dodgem ride in dodging responsibility for his Labour-controlled local authority. He will agree with Accounts Commission for Scotland reports telling us


that there are 300,000 surplus school places throughout Scotland, and it is only right that new unitary authorities consider school closures carefully and sensitively. As I have said in the House on other occasions, when authorities come to do that I hope that they will take all factors into account. When considering the position of Whiteinch primary school, they must take into account the specific care and the sensitive treatment given to travellers and their children.
I hope that the hon. Gentleman will arrange an early meeting with his Labour-controlled council to put the points to it that he has put to me. At the end of the day, it is the council that must come to a decision.

Mr. Stewart: Does my hon. Friend agree that the guild represents a responsible set of people? Many of them will be at the Neilston show this Saturday, which starts at 11 o'clock, if my hon. Friend is free. Does he agree also that the education of travellers' children involves a genuine issue? If he receives a request from the guild for a meeting, will he agree that either he or my right hon. Friend the Secretary of State or, if appropriate, his Scottish Office officials should have a discussion on genuine issues, not the points raised by the hon. Member for Glasgow, Hillhead (Mr. Galloway)?

Mr. Robertson: When my hon. Friend sees the members of the guild on Saturday in his constituency, as he takes his place at the fair, he can pass it on to them that my right hon. Friend and I will be delighted to see any delegation that is led by my hon. Friend.

Mr. Connarty: It is obvious that the Minister will be concerned about the closure of any school that is attended by travellers' children and any other children. How is it that the same concern was not given to a school that is likely structurally to collapse? I refer to the Minister's visit to Bo'ness academy in my constituency. As a result of the cement that was used in construction, the school is falling down. We are told that it will have to be replaced within a decade. In other words, it will not be used after that. Why did the Minister not come forward with any further funding for the school? Why has he left the local authority with the problem of a collapsing school, with no help from an uncaring Government?

Mr. Robertson: It is truly unfortunate for the hon. Gentleman's constituents that he feels that he cannot adopt the responsible attitude that has been taken by the headmaster and the local authority. The hon. Gentleman knows that I visited the school with him on 26 February. He knows also that the consulting engineers' report made it clear that there was no immediate concern about the continued occupancy of the building, subject to the results of continuing monitoring. The new Falkirk council has time to consider the options for the building in the light of the information that it now has.
During my visit, as the hon. Gentleman knows, I encouraged the council to think further about the private finance initiative and work on the school building. On 9 April, PFI officials from the Scottish Office met Falkirk council and offered its representatives every assistance. I have asked to be kept in close touch with developments on that front.

Income Tax

Mr. Brooke: To ask the Secretary of State for Scotland what estimate he has made of the additional revenue which would be raised from an extra penny on income tax in Scotland. [26065]

Mr. Michael Forsyth: The latest Treasury estimate is that each penny raised in tartan tax would raise £130 million.

Mr. Brooke: Given what that sum would achieve if expended throughout Scotland, does my right hon. Friend agree that it would be much better if it were allowed to remain and fructify in the pockets of the people?

Mr. Forsyth: I agree with my right hon. Friend's words, which I think were originally put forward by Gladstone, whose legacy has been betrayed by the Liberals, who are too keen now to raise the tartan tax in Scotland. I agree that it would be unjust for people in Scotland to have less in their pay packets for the same wage as others elsewhere as a result of implementation of the proposal to have a tax-raising parliament.

Mr. David Marshall: Does the Secretary of State agree that Scotland is colder than the rest of the United Kingdom and that Scots pay more value added tax on fuel than any other part of the UK? Does he not realise that VAT on fuel is a hated and iniquitous Tory tartan tax on Scotland's people?

Mr. Forsyth: If we had listened to Labour Members, we would have much higher VAT rates, because, until recently, their period in opposition has been geared towards arguing for more expenditure. If the hon. Gentleman is interested in taxes that place an unfair burden on Scotland, he might have a word with the hon. Member for Dunfermline, East (Mr. Brown), who wishes to remove child benefit for children over the age of 16. That was originally a tax allowance. Removing it is a tax on education and on students. With more people staying on after the age of 16 in Scotland than in any other part of the UK, Scotland would be hit hardest by that Labour proposal to tax education.

Mr. Gallie: Does my right hon. Friend agree that additional revenue raised by Government means lower take-home pay for individuals? What effect would that have on business, on high streets in Scotland and on people attempting to create wealth?

Mr. Forsyth: If we have to pay higher taxes for Labour's Scottish Parliament in Scotland, there will be one result: fewer jobs, less take-home pay, less investment and less opportunity for us to have a say at the top table in the European Community, at Westminster and in the world's councils. That deal suits no one except the socialists.

Mr. Maclennan: I welcome the Secretary of State's recognition of Mr. Gladstone's fiscal prudence, which is, of course, a typically Liberal characteristic, and I draw the Secretary of State's attention to Mr. Gladstone's favouring of devolution all round. Instead of speculating


about taxation in future, will the right hon. Gentleman give a factual account of how much increased revenue he and his Government have raised in Scotland as a result of taxation increases since the last general election?

Mr. Forsyth: May I respectfully point out to the hon. Gentleman that the best traditions of 19th-century Liberalism are found on the Conservative Benches? On the subject of his party's commitment to home rule in the 19th century, perhaps the Labour party might learn a lesson there, because that commitment destroyed the Liberal party and condemned it to being out of government for a generation and more.

Mr. George Robertson: Given the Government's deplorable record in breaking practically every one of their tax promises made at the last general election, the Secretary of State has a cheek to raise in any way the subject of tax. When will he realise that the Scottish people are not impressed by scare stories and exaggerations about a power for the Scottish Parliament, which will probably never be a tax burden, but they are impressed—and, indeed, disgusted and angered—by the fact that, since 1992, they have had to pay 22 extra tax increases imposed by the Government, they have had a real tartan tax in VAT on fuel and they are now getting the Forsyth tax and council tax bills through every letterbox in the land?
I read that the Secretary of State was claiming that the Scottish Tory party has
no divisions and no factionalism",
and that he wants it to be seen as a model for the Tory party nationally. If that model is going to reduce the national Tory party to 13 per cent. in the opinion polls, I endorse his call.

Mr. Forsyth: I hope that the whole of Scotland will recognise the hon. Gentleman's smugness in assuming that, because he happens to have a bit of a lead in the polls at present, he has a mandate to make the Scottish people pay more in income tax than any other part of the UK.
The hon Gentleman is a reasonable man. If he is sincere in his hints that he will never use the power that he says he will seek in order to raise a tartan tax, why does he not just drop his commitment to the tartan tax and end the uncertainty that is disadvantaging Scotland in competing for jobs and inward investment? Why not remove that from the scene altogether? It would be easy to do.
The hon. Gentleman should also say how he will fund the promises made by his hon. Friend the Member for Dunfermline, East, involving about £390 million extra for local government. That represents the whole of the 3p of tartan tax. Where is the money to come from and what is going on in the Labour party? This morning on the radio, the hon. Member for Holborn and St. Pancras (Mr. Dobson), who speaks for the Labour party on local government, said, "There will be no more extra money for local government." But north of the border Labour is saying that there will be more money for local government. Where will it come from if not from the tartan tax?

Lady Olga Maitland: In addition to the punitive tartan tax, will my right hon. Friend confirm that the sixth form

tax that has been proposed by Labour would punish people to the tune of £1, 000 per child for children trying to follow a sixth form course? [Interruption.] Is that not cheating children, denying them the chance of fulfilling their education?

Mr. Forsyth: These questions are broadcast, and I hope that every parent in Scotland with teenage children who is struggling to keep them at school or send them to further education colleges will note how Opposition Members laughed, jeered and sneered when my hon. Friend spoke about the importance of child benefit and what it means. The hon. Member for Hamilton (Mr. Robertson) might like to note that the removal of that benefit is equivalent to an additional tax. It is far more than the tartan tax, and it has been proposed by the Labour party, which should be ashamed of putting it forward.

Fire Service

Sir Russell Johnston: To ask the Secretary of State for Scotland what assessment he has made of the adequacy of the funding of the fire service. [26066]

Lord James Douglas-Hamilton: Revenue funding of the fire service is the responsibility of the fire authorities. It is for those authorities to ensure that the budgets which they set are sufficient to enable them to comply with their statutory obligations.

Sir Russell Johnston: The Minister knows that the highland region considers that the allocation of funds for the fire service in the highlands is quite inadequate and does not take proper account of that spread-out rural area. In view of the Ministers well-known belief in open government, does he agree that it would be good if the structure and funding of the fire service were looked at by the Select Committee on Scottish Affairs?

Lord James Douglas-Hamilton: It is obviously up to the Select Committee what subjects it looks at. Grant-aided expenditure has been increased by 20 per cent. for the current year. None the less, the new fire board has substantially reduced its budget. That represents an abrupt change of policy which I deplore.
I also make it quite clear that, if the fire board does not like the formula that has been laid down by the Convention of Scottish Local Authorities finance working group, it should submit its proposals and disagreements to COSLA. However, I understand that so far it has not done so. If it tries to close fire stations, putting people under threat and at risk, its proposals will have to have the clearance of my right hon. Friend the Secretary of State, who has made it clear that he will not allow any deterioration of service. There will be no support for unacceptable proposals.

Mr. Macdonald: On that point, will the Minister assure us that he will also veto any proposed redundancies that are suggested purely on cost grounds in this financial year, in the way he has said that he will veto fire station closures in this financial year?

Lord James Douglas-Hamilton: The hon. Gentleman is right to say that a reduction in the number of firefighters, fire appliances or fire stations would definitely require my right hon. Friend's approval, and he


has made it clear that he will not approve closures or reductions that would prejudice public safety. I repeat that we have increased grant-aided expenditure by 20 per cent., so there is no need whatever for such moves.

Greater Glasgow Health Board

Mr. Watson: To ask the Secretary of State for Scotland when he expects to meet Greater Glasgow health board to discuss NHS funding. [26067]

Lord James Douglas-Hamilton: My right hon. Friend has had no request for such a meeting.

Mr. Watson: The Minister knows that one of the acute hospitals covered by Greater Glasgow health board is the Victoria infirmary, which is suffering a severe funding crisis. Partly as a result of that, it is indulging in a competitive tendering process for support services, about which I have written to him.
Will he address the concerns of trade unions, staff and, to some extent, management about the activities of a company called Capita and an individual called Norman Foster, who was previously employed by the hospital? He seems to be giving the company an inside track in the tendering process while an in-house tender bid has been blocked. Those are important issues of public interest that must be investigated. Will the Minister undertake to do so?

Lord James Douglas-Hamilton: I am happy to look into the case. My understanding is that the NHS trust has already done so and considers that there is not a conflict of interest and that the correct procedures have been followed. I agree that there is a potential conflict of interest. I will look into the matter and write to the hon. Gentleman. I stress that Greater Glasgow health board has been allocated more than £589 million for revenue expenditure, which is a substantial sum for choosing the priorities for its health care.

BSE (Agriculture Council)

The Minister of Agriculture, Fisheries and Food (Mr. Douglas Hogg): With permission, Madam Speaker, I would like to make a statement about the meeting of the Agriculture Council which finished yesterday evening. I represented the United Kingdom, assisted by my noble Friends the Parliamentary Under-Secretary of State for Scotland and the Parliamentary Under-Secretary of State for Northern Ireland, and by my hon. Friend the Parliamentary Under-Secretary of State for Wales, the Member for Cardiff, North (Mr. Jones).
The Council discussed the reform of the Community fruit and vegetables regime and the Commission's proposals for this year's farm price fixing. Both are important matters, and I set out the United Kingdom position on the lines that I have explained to the House on many occasions.
The Council also discussed bovine spongiform encephalopathy. I put before it a dossier of information setting out the measures that the UK has taken. I shall place a copy of that dossier in the Library. My first objective at the Council was naturally to achieve action on the export ban. Progress was made on this, and the conclusions of the Council explicitly recognise that the ban is temporary. They also recognise that the measures already put in place and foreseen form
part of a process which should allow the export ban to be progressively lifted on a step by step basis.
In addition, the Council has recognised that the lifting of the ban in respect of tallow, gelatine and semen should be addressed in the Standing Veterinary Committee shortly. As the House knows, the relevant decisions are taken by qualified majority vote in the Standing Veterinary Committee, not in the Council. The next meeting of the Standing Veterinary Committee takes place next week.
Nevertheless, this welcome progress should not obscure the fact that the ban is disproportionate and unjustified. Accordingly, I made it clear to the Council, and recorded in a formal UK statement, that, on the basis of the scientific evidence available, there should be an early and complete lifting of the ban. Accordingly, we are proceeding with our application to have the ban set aside by the European Court of Justice under article 173 of the treaty. Our application is in an advanced stage of preparation, and will be lodged shortly.
The House will also know that the National Farmers Union has been granted leave to seek judicial review of the export ban, and I understand that the matter is expected to be referred to the European Court of Justice on 3 May.
I turn now to the concept of the selective cull. The Council accepted that the proposals that I have made involving the culling by farm of birth of age cohorts born after September 1990 in which there have been cases of BSE were very much in the right direction. It was also agreed that it would be helpful to investigate whether additional measures targeted on herds where there had been many cases of BSE would be justified.
This is a point which is obviously worth careful consideration, and my officials will be entering into technical discussions on this shortly. It is, however,

already clear that, should we proceed with the cull, the scheme that we have put forward will form the major component of any such policy, and that the scale of any measure finally put in place will be very much along the lines that I have already indicated to the House.
I turn to the link between a lifting of the ban and the selective cull. The Government's position remains as it has always been: the two must proceed in parallel.
I am glad to say that the partial recovery in the beef market has continued. Consumption is now at about 80 per cent. of pre-crisis levels for good-quality cuts, and average market prices are 109p a kilogram, compared with 120p a kilogram before the crisis.
The scheme for the slaughter of male calves has been operational from 22 April and the scheme for the disposal of cattle of more than 30 months old, at the end of their working lives, will start operation tomorrow. That follows a decision of the management committee on 26 April, when, on our proposal, specific provision was made for payments to be made on a dead weight as well as live weight basis. That follows strong representation from the farming unions.
I know that many hon. Members and their constituents are concerned about how the scheme—I shall call it the 30-month slaughter scheme—will work in practice. The first point is that the scheme is now launched. The first cattle are likely to be processed tomorrow. More than 60 abattoirs and 80 markets across the United Kingdom will act as collection centres. Farmers will be anxious to have the finalised details. We shall be sending direct to farmers a note setting out all they need to know about the new arrangements.
I would summarise the position thus: in our view, the ban that has been imposed by the European Union is unjustified and should be removed. The conclusions arrived at yesterday have established a process that could achieve that. I very much hope that the Commission and all member states will play a full and active part in resolving this grave and urgent problem.

Dr. Gavin Strang: I advise the Minister again that we fully share his commitment to securing an early lifting of the ban on the export of UK beef and beef products, and it is very disappointing that he has so little progress to report to the House. He said that the European Union Standing Veterinary Committee is likely to consider lifting the ban on tallow, gelatine and semen. Although any alleviation of the ban is to be welcomed, he will recognise that the number of jobs involved is small relative to the total number at stake.
Is the Minister aware of the great anxiety across the industry at his failure to put in place the programme for the destruction of the carcases of the cattle over 30 months old? There is huge uncertainty about which cattle will go first, to which livestock market, and to which abattoirs.
Does the Minister feel that his failure to put that programme in place, as he agreed to do, undermined his position at the council meeting? Does he agree that it is absolutely vital to the financial position of farmers and the welfare of animals that he brings that programme into full operation as soon as he possibly can? The measure should be up and running now, and while we continue without it fully in operation, many animals are on farms that are running out of feed, where serious welfare problems could develop.
Will the Minister also give very careful consideration to the levels of dead weight compensation and live weight compensation for the animals that are to be destroyed, taking into account the needs to give a fair return to farmers and to avoid further disruption to the beef market?
How are the slaughterhouses expected to deal with animals that are ineligible for human consumption? There is unease in many quarters that animals that are to go into our food may be slaughtered in slaughterhouses that are also dealing with animals that are ineligible for human consumption. Is it the Government's intention that the whole carcases of all the animals ineligible for human consumption are to be incinerated?
Two weeks ago, the Minister spoke about the need for an urgent look at exemptions to the 30-month ban. What progress has he made on that? With regard to the additional selective slaughter programme, can he confirm that the agreement that he reached last night was on the basis of a strengthening of the proposed additional slaughter programme? Does that mean killing even more cows?
Is it not now clear that the Council of Agriculture Ministers was not satisfied with our identification arrangements? Had the Government implemented the tagging policy that we advocated six years ago—which is now in place in Northern Ireland—the Minister might have been in a slightly stronger position in the Council this week. If we are to embark on an additional selective slaughter programme, this must be arranged quickly—not least because of concerns that farmers who have BSE cohort animals may be tempted to sell them on.
The eradication of BSE is a desirable objective. The Minister will have read the letter that I sent to him on Monday, calling for an investigation into the flouting of the ruminant feed ban, and into the high percentage of new cases of animals born after the feed ban was introduced in 1988. Such an inquiry could have been completed within two or three months, and it is necessary if we are to eradicate BSE from our cattle.
Surely the determination—[Interruption.] I can assure Conservative Members that we intend to pursue this issue, which is the major issue facing the Government—the Prime Minister himself has said so. Surely the determination to resolve the issue and tackle the question of eradicating BSE completely from our cattle is vital. The quicker we go down that road, the quicker the ban on exports will be lifted.
Does the Minister recognise that this BSE/Creutzfeldt-Jakob crisis throws a new light on the importance of the research establishments that are carrying out work on BSE and CJD? The Minister will advise the House that the Government have increased expenditure on BSE research since it was discovered in 1986—it would be hard not to have done so—but that increase was against the background of massive cuts in food and agricultural research. Has it occurred to him that the Government's policy of short-term contracts in research establishments is not helpful to the long-term research that is required on BSE and CJD?
Finally, I appeal to the Minister and to the Government to withdraw the prior options review plan to sell off the Government establishments that are carrying out research into BSE and CJD. Surely he must recognise that selling these establishments and privatising the staff is not in the interests of our scientists. [Interruption.] He must

understand that BSE and CJD will be with us for some years to come, and that long-term research must be done by scientists in Government establishments who do not spend their time looking around for their next job. [Interruption.]

Mr. Hogg: The reception that the House gave to the hon. Gentleman's last points might suggest to him that he was not holding the House on those particular points.
First, I am grateful to the hon. Gentleman for his support. Secondly, as regards movement on gelatine, tallow and semen, clearly if we get it, it is modest; we would like more—we must have more—but it is welcome none the less.
As regards the 30-month rule, the scheme will become operational tomorrow. I always said that it would start during the week beginning 29 April. We will put out to all farmers an information note, and the hon. Gentleman will have seen an extensive advertisement dealing with that in at least three of the farming newspapers last week.
The hon. Gentleman will know that we have persuaded the beef management committee to agree to a live weight of 1 ecu a kilo and a dead weight of 2 ecu a kilo. That was secured last Friday.
The carcases of animals slaughtered under the scheme will go to rendering. They will be kept separate in distinct lines, and may be dealt with on separate days.
The exemptions are important. I spoke to Commissioner Fischler about that last week, and again frequently in the Council. I think that we will be able to make progress with the Commission on that point, and I shall go out to consultation, because it is important.
With regard to the selective cull, we clearly should consider reactions to our consultation process, both within the United Kingdom and from Community and Commission vets. The Commission vets made it plain to the Council and to everybody else that they endorsed the scheme that we brought forward and that they could not identify a scheme which they would commend in preference to our own.
Yes, identification needs to be improved, and we hope to have a much improved scheme in place by 1 June.
With regard to cattle born after the ban, if the hon. Gentleman would care to look at the dossier that I am putting into the Library, he will see a number of documents under the heading "A" which show an encouraging decline in the number of cattle born after the ban. Our concern over that question is one reason why we changed the feed regulations in the way we did.
Finally, of course it is desirable to accelerate the reduction in the rate of BSE. It is that thought which is, at least in part, behind the thinking that underpins the concept of a selective cull.

Several hon. Members: rose—

Madam Speaker: Order. The entire House seems to be rising. It is unlikely that everyone will be called and it is extremely unlikely that Members will be called if there are long exchanges, so it is entirely up to the House how many Members are called. I want brisk exchanges, please.

Sir Hector Monro (Dumfries): Does my right hon. and learned Friend accept that many of us are most grateful


to him and his colleagues for the efforts they have made to resolve the problem? But will he also accept that it is now urgent that farms should get the 30-month-old cattle away and compensation paid, and that consideration should be given to the slow-maturing cattle? Will he do rather more than was apparent this morning to explain to the auctioneers and to the farmers what is to happen, when the beasts will be taken to the market, and all the details they so urgently require?

Mr. Hogg: My right hon. Friend is entirely right. At the end of last week, the farming press carried details of the 30-month scheme. I shall be sending a note to farmers and others with the relevant information. It is important now that the scheme opens tomorrow and that there is rapid progress through the collection points, and thereafter through the abattoirs, followed by early payment.

Mr. Paul Tyler: Does the Minister recognise that we share his objective of seeking to raise the export ban as quickly as possible? May I go further and commiserate with him most sincerely over the very difficult situation in which he has been put by two avoidable factors, the first being, of course—as Sir David Naish of the National Farmers Union made clear—the ultimatums, threats and sabre rattling of the Euro-sceptics in the Conservative party? As the Minister was not in the Chamber to hear it, perhaps I should draw his attention to the remarks of the Secretary of State for Scotland, who repeated precisely those accusations an hour ago, and said that they were making his task that much more difficult.
Is it true—as is apparent from everything that the Commission told me and my colleagues when we were in Brussels in the past 10 days, and from everything that it has told many Conservative Members—that, had the Minister presented his package of proposals weeks ago for informal consultation, by now we would be well on the way to removing entirely the ban on exports?
I shall put a specific question to the Minister, which obviously will require a specific answer. Yesterday, his colleagues in the Scottish Office Agriculture, Environment and Fisheries Department, in part 6 of a briefing paper, said:
It has been suggested that we should cull whole herds, but that approach implies that BSE is transmitted from animal to animal, whereas on the available evidence that is not happening or not at any significant"—

Madam Speaker: Order. I have asked the House for brisk questions. It is totally unfair for hon. Members, when they see so many other hon. Members rising, to take up so much time with long quotations. Hon. Members know full well that the Minister is making a statement. They should come into the Chamber with their questions prepared and not have to sort through a great deal of paper to find a relevant section.

Mr. Tyler: I simply ask the Minister whether he endorses the Scottish Office's view that this disease can be transmitted from animal to animal. If he does, it blows the whole of his cull policy out of the water.

Mr. Hogg: The hon. Gentleman's support was a bit double-edged—none the less, I am grateful to him for the

favourable aspects of it. Yes, of course speedy movement is important. To get it, we must have political good will among member states. We have had considerable assistance from the Commission, for which I am grateful, but we now must have good will from member states. That is what I say to my colleagues around the Council table.

Mr. Paul Marland: In the light of the Europeans' blatant disregard of the best scientific advice available, does my right hon. Friend think that they have a hidden agenda, especially since the Irish have been saying that this ban is likely still to be in place by the autumn? Furthermore, is it time for us to start insisting that we will not accept meat into this country that has not passed through slaughterhouses with the same standards as we have in the United Kingdom? We know that there is BSE in Europe, and we also know that specified offal is not removed in slaughterhouses in Ireland, Germany, Spain or—most interestingly for McDonald's—in Holland.

Mr. Hogg: Many hon. Members will share the concern expressed by my hon. Friend at the end of his observations. As for his first question, there is no good scientific basis or other legitimate justification in law or in logic for the ban. We are facing a very deep concern among member states about the perception of consumers in their respective states, which is getting in the way of a rational, considered view of the evidence.

Mr. Andrew Faulds: What plans does the right hon. Gentleman have to set up a profound examination not only into the dangers of cannibalisation of feed but into the much more disturbing and profound problem of transgenic experimentation?

Mr. Hogg: It is clearly important to have a view about the risk that feed has posed to the health of the national herd. We have a clear view on that, and it was our concern which led to the ban on the incorporation of feedstuffs, in the first instance of ruminant protein, and thereafter of all mammalian protein.
I will tread a little cautiously on the second point, because I am not sure exactly what the hon. Gentleman had in mind. Research on transgenic mice has been important in determining whether BSE is transmissible. I hope that the hon. Gentleman would support that.

Mr. David Nicholson: Over the past six weeks, my right hon. and learned Friend has shown extraordinary patience with our European partners, but he must be aware that that process has sorely tested the patience of many in the farming and beef industries, who are crying out for clear and detailed decisions regarding a resolution of the matter. Bearing in mind the remarks made a moment ago by my hon. Friend the Member for West Gloucestershire (Mr. Marland), will he consult and take decisions with his Cabinet colleagues about how much further we can go from the very selective slaughter policy that he has proposed, because I do not think that Conservative Members would back such progress, and what other measures we need to take to safeguard our national position?

Mr. Hogg: My hon. Friend said that the crisis and the reaction to it have sorely tested the patience of the


industry. He is quite right. I am also conscious of the fact that it has sorely tested the patience of right hon. and hon. Members. I have explained to my colleagues around the Council table the huge importance, expressed in political terms, of making early progress. I have explained that with reference to such considerations as I know are in the mind of my hon. Friend. I entirely endorse his sense of exasperation and frustration that progress has been so slow.

Mr. Dennis Skinner: Has it not crossed the mind of Ministers of this pathetic Government that, during the 23 years since we became a member of the Common Market, the only way to resolve matters has been to go in there and let the other Ministers know that you mean business? For a few fleeting moments last week, somebody in the Tory Government was going to bang a big drum, but then they backed off. It was the only time that the Government looked as if they were going to do something positive.
It is high time that the Government understood that they are involved in a political issue—it is not technical or academic. When they realise that, they will be doing something for the farmers and all the others who have got the sack in Britain. It is high time that there was a cull—a cull of the Cabinet and the Government. Let us have a general election and cull the lot of them.

Mr. Hogg: One should not always be kind to the hon. Gentleman, but there is a grain of truth in what he said—perhaps more than a grain of truth—to the extent that he has emphasised the grave consequences of the ban for the industry, for people across the rural community and in other parts of the economy. That is true.
Because this is so serious, we cannot indulge ourselves in the sort of idle rant that we have just heard from the hon. Gentleman. We must ask ourselves what policies are most likely to lead to an early lifting of the ban. I have advocated, do advocate and have pursued the policies of persuasion and negotiation, because I think that those are most likely to achieve the essential end.

Mr. Nicholas Winterton: Is my right hon. and learned Friend aware that those of us who represent beef and dairy constituencies are running out of patience? We will not accept an increased cull unless it is justified by scientific advice. Will he understand that decisions have to be reached within hours, not weeks? Will he give me an assurance that the Chelford market and agriculture centre in my constituency will be nominated as one of the collection points? He knows that the European Community is out to destroy our sale and distribution system, and the only way to retain it is to ensure that all the cattle markets share in whatever funds are going.

Mr. Hogg: I understand that most right hon. and hon. Members and the agricultural community are losing patience. I understand my hon. Friend's reservations about the concept of a selective cull, and we have tried to address those reservations in our consultations. I am conscious that we could not pursue a selective cull policy unless it was a policy that the House was ready to acquiesce in. That is the most important reassurance that I can give my hon. Friend.

Mr. Calum Macdonald: Why are the Government still completely isolated in Europe?
Either the other Governments are complete villains and will not listen to reason and argument, or the Government are entirely inept in the way that they are putting forward their argument. Which is it?

Mr. Hogg: That is not the correct analysis. I agree with the hon. Gentleman that there is enormous resistance to lifting the ban—that is true. However, when one listens to the arguments advanced across the Council table or among the vets, one sees that that resistance is not justified in scientific terms, and rarely in any other terms of considered argument. It is articulated in terms of consumer concern. I believe that a real fear is stemming from the market reactions in countries in Europe, and that that has caused them to fix on this matter as a way of restoring market confidence in their own countries. That is not a proper approach, and it is not one that I would commend to the House.

Sir Patrick Cormack: Will my right hon. and learned Friend say very firmly to our European colleagues that there is nothing more destructive of public confidence—about which they are protesting so much—than their constant refusal to accept scientific advice?

Mr. Hogg: My hon. Friend is wholly right, and I have said this to my colleagues in the Council many times—sometimes in even more robust language than that of my hon. Friend.

Mrs. Ray Michie: In relation to the slaughter scheme, I press the Minister, in particular, on collection centres and designated abattoirs. The farmers in my constituency do not know what is happening. We need to know whether there will be local provision on some of the islands and Kintyre. I am glad that the Secretary of State for Scotland is in the Chamber.
If there is no local provision, and if there is restriction on these centres, will not animals be ferried and trucked for many hundreds of miles to a collection centre and then back again? That will result in a loss of weight and a loss of value in the animal. The farmers in my constituency are deeply frustrated. A logjam is building up, and there are cash flow problems. There is an increasing feeling of hopelessness, because farmers do not know what will happen.

Mr. Hogg: As the hon. Lady can see, my right hon. Friend the Secretary of State for Scotland is sitting on the Front Bench, and he has heard what she has said about information. He is sending information to the Scottish farming community. I know that he has paid careful attention to what the hon. Lady has said. The farming community and the Government are worried about a logjam in the early stages of the 30-month-plus cull. We are seeing whether there are any ways in which we can free up that logjam.

Sir Peter Emery: Does my right hon. and learned Friend accept that most people believe that he is doing all that is possible to fight for the agricultural industry? None the less, we know that the Opposition are political and commercial, to the benefit of the French, German and Dutch farmers.
Irrespective of that, does my right hon. and learned Friend understand that there is great concern in the south-west? Farmers do not know where they are—they do not know what is happening and what they should do. Will he try to ensure that communication between his Department and not the NFU but farmers individually, is considered and greatly improved? Farmers are desperate to know how to act and what to do.

Mr. Hogg: My right hon. Friend has a very important point when he suggests that the opposition to our position is not based on science; I agree with that view. He is also right when he emphasises the importance of communicating the schemes and the details to the farming community. We did place material in the farming press last week. We have given much material and information to the NFU—I take my right hon. Friend's strictures—and he may have heard that I shall be sending a note to all farmers very shortly.

Mr. William Ross: Does the right hon. and learned Gentleman understand that we welcome the fact that payment on a dead weight basis as well as a live weight basis will now be the norm? Will he confirm that the sum of 109p per kilo is on a live weight basis?
Does the right hon. and learned Gentleman recall that he commended the Northern Ireland system of tracing and identifying cattle? Given that this subject, as he said today, is a matter of consumer concern and consumer perception, would it not be wise to use the traceability methods that exist in Northern Ireland, and in some other parts of the United Kingdom, as a lever to open the European export door? Every beast exported from anywhere in the United Kingdom is one headache fewer for him and for the Treasury.
Will the right hon. and learned Gentleman also consider, in the light of the interest displayed in his statement today, that we are overdue for another full debate on that subject?

Mr. Hogg: A full debate is a matter for the usual channels. I am grateful to the hon. Gentleman for his support for both a live weight and dead weight valuation for compensation.
On identification, the hon. Gentleman is right to say that the Northern Ireland arrangements are better than those in any other part of the United Kingdom; that is wholly correct. As the hon. Gentleman knows, we are considering the concept of an exemption from the 30-months scheme. It is possible that that might also be used as a justification for a partial lifting of the ban in respect of those herds that are so defined. We are working energetically on that. That would, I think, be of enormous value to the Province.

Mr. Nicholas Budgen: Will my right hon. and learned Friend confirm that, if he were to introduce a scheme of compulsory killing of healthy cattle to reassure European consumers, he would need fresh primary legislation in this Parliament? Does he agree that, judging by the views of the House this afternoon, it would be very unlikely that such a Bill would pass the House?

Mr. Hogg: Clearly, any scheme that was brought forward would have to have proper statutory authority.
As my hon. Friend well knows, that could be primary legislation or it could be secondary legislation under existing law. I further agree with my hon. Friend that a scheme could not be brought forward, whether under primary or secondary legislation, unless it was such as commended itself to the House.

Mr. Peter Hardy: Will the Minister remind his hon. Friends that the western European countries—indeed, any country—could impose a ban, and that, in the present situation, political skill and adequate initiative might lift that ban earlier than would be the case if we did not have an economic union?
Does the Minister understand that there is deep anxiety on this subject? I listened, and he may have listened, to farmers expressing on television their concern that they have heard nothing from the Ministry of Agriculture in recent weeks. They pointed out that we have not even had replies to questions of the sort that I asked the Minister two or three weeks ago—will animals be killed that have never been fed infected mammalian protein, in farms where there has been no death or case of BSE from animals that have never been fed that protein? A large number of dairy farms in this country are in that position, and the farmers have wrestled with acute anxiety for far too long.

Mr. Hogg: The hon. Gentleman is right to imply that the European ban is not the only problem we face. There are a number of national bans across the world—including those erected by Commonwealth countries—which need to be addressed.
I accept that farmers need yet more information. We have placed a whole lot of stuff in the farming press, we have been in continuous and virtual daily contact with the farming unions, and I shall be sending written material to all farmers.
On the last part of the hon. Gentleman's question, his description of farms in his constituency explains why we are pushing for an exemption scheme to enable established herds of the sort that he described—but more than 30 months old and beef—to be allowed into the human food chain.

Mr. Richard Alexander: Does my right hon. and learned Friend recall that, when he and I first came into politics, the European Union was known as the Common Market—a mutual trading organisation? By what right does that organisation now say, on no scientific grounds, not only that our beef cannot be sold in Europe, but that it cannot be sold anywhere else, either?

Mr. Hogg: I share my hon. Friend's view that extending the prohibition—whether wholly or in part—to third countries, goes beyond the competence of the Union.

Mr. Robin Corbett: While it is right that the emphasis should be on the state of the beef market, what consideration has the Minister given to the impact of the proposed slaughter policy on the dairy industry? Is it likely to force up the doorstep price of a pint?

Mr. Hogg: I believe not.

Mr. Edward Garnier: Does my right hon. and learned Friend accept that any case that he brings


to the European Court of Justice will no doubt please my farmers, but could take as long as two years to reach a conclusion? Will he ensure that any application for interim relief is launched as speedily as possible?

Mr. Hogg: That is obviously an important consideration.

Mrs. Alice Mahon: I declare an interest in public health. Public confidence has been badly affected by this debacle, and many people do not want to eat beef or feed it to their children. Is it not therefore important that the weaknesses in the current food labelling laws should be urgently addressed? Manufacturers are not required to identify the species origin of the meat used in their products. What plans does the Minister have to tackle that problem and to allay people's fears?

Mr. Hogg: The essential question to ask is whether British beef is safe—to which the answer is yes. I do not honestly think that labelling has the slightest bearing on that issue.

Sir Donald Thompson: Have not my right hon. and learned Friend and his predecessors consulted the EU since 1987 on every step of BSE? Have not the veterinary committees and other committees in the Union been appraised of what we were doing, and have they not agreed with what we were doing? Does not the current hysteria point to commercial and political considerations, not scientific ones?

Mr. Hogg: My hon. Friend has an extremely distinguished record in the field, having been a distinguished Minister in my Department, and what he has said has considerable force. There has been an endless dialogue between officials from the United Kingdom and those in the European Union. My hon. Friend is right to assert that most of the opposition we have been encountering has no justification, either in science or in logic.

Mr. George Foulkes: Is not the truth that, in spite of all the Minister's huffing and puffing and his dossier, in six weeks he has achieved nothing in terms of lifting any of the bans, including those imposed unilaterally by Commonwealth countries that have nothing to do with the European Union, while many of my constituents are continuing to lose their jobs? How long can the Minister continue in his job if he gets nowhere and still retain any degree of respect in the House?

Mr. Hogg: As to respect in the House, that is for the House to decide. At Luxembourg, we put in place a process that is capable of leading to the lifting of the ban. The essential question we must face is whether member states will play a full and active part in response to Commission proposals that will enable that to occur. I express the earnest and profound hope that they will.

Mr. Patrick Nicholls: Does my right hon. and learned Friend agree that an uncharitable assessment of the position is that all he can do in the present position is to ask, plead, beg and to cajole, but compel nothing? Does he agree that, if he and his right

hon. Friends are reduced to such a position under the present rules, the time has come to learn the real lesson of this miserable business and to ask: on what terms should we remain in the Community for the next 25 years?

Mr. Hogg: This is a very grave matter. Therefore, it is incumbent on all who have policy responsibilities to ask ourselves what kinds of policies are most likely to result in a lifting of the ban. I have been pursuing a policy of persuasion and negotiation, and I believe that that is the right approach.

Mr. Ieuan Wyn Jones: Does the Minister accept that the understandable frustration felt by farmers could now turn very easily into anger and despair at the delay in lifting the ban and lack of information about the slaughter policy? Will he do two things immediately? First, will he confirm that under no circumstances will the Government agree to the ban remaining in place until autumn this year? Secondly, will he confirm when the farmers will receive letters informing them about the collection points and the licensed abattoirs?

Mr. Hogg: On the matter of information, the hon. Gentleman will know that, last week, three farming publications carried extensive information about the issue. In a few days, the Ministry will write to all farmers enclosing a very detailed information pack.

Mr. John Townend: Will my right hon. and learned Friend accept that there is great disappointment in my constituency at his inability to announce the lifting of the ban? Our fishing industry has been savaged by the European fishing policy, and now the European Union has started on our dairy and beef industries. My right hon. and learned Friend has admitted that the ban is illegal, unjustified and unwarranted. Therefore, will he apply a time limit and tell our friends overseas that, if the ban is not lifted within three to four weeks, we shall take retaliatory action?

Mr. Hogg: This is indeed a very serious matter, but we are all under an obligation to ask ourselves and one another what policies are most likely to bring about a speedy removal of the ban. The policies that I have outlined are those which I believe are most calculated to achieve that objective.

Mr. Tam Dalyell: Could we return to the desperately important question raised by my hon. Friend the Member for Edinburgh, East (Dr. Strang) about the United Kingdom's scientific infrastructure? What is happening with the central veterinary laboratory, the central science laboratory and the neuropathogens laboratory in Edinburgh and the cuts in work that may be vital in identifying the root cause of the problem? The last time that he was at the Dispatch Box, the Minister said very courteously that he would look at the experiments conducted in Ames, Iowa, involving proteins 130 and 131, and the question of prions in sub-heated food.

Mr. Hogg: Of course scientific research is important. I have discussed it on a number of occasions with Professor Pattison, the chairman of the Spongiform Encephalopathy Advisory Committee, to ascertain


whether he considered there to be a shortage of resources that could be addressed in those areas for which I have responsibility. I hope that I am not misquoting Professor Pattison, but I think that he was content with the present level of research. If he were not, he would express further concerns, and I would certainly do my best to address them. In the current year, we have increased MAFF spending on research by £1 million.

Mr. Tony Marlow: Is my right hon. and learned Friend aware of the concern that, if there are too few collection points for cull cows, many calves and other animals will go to those collection points, and other markets will lose business and may well be threatened? Will my right hon. and learned Friend look carefully at that issue, and consider licensing other collection points?

Mr. Hogg: On the general point, of course it is important there should be a sufficient number of collection points. When we see the system in operation, we shall certainly reflect on whether the number is adequate. I hope that my hon. Friend will forgive me—as will my hon. Friend the Member for Macclesfield (Mr. Winterton)—if I do not accede to specific applications on the Floor of the House, as that is not an orderly way to conduct business.

Mr. Andrew Welsh: As the Irish Agriculture Minister believes that the blanket ban will still be in place in the autumn and the science involved takes time, will the Minister take note of the early-day motion calling for a zonal or regional approach to breaching the blanket ban? It was supported by 86 hon. Members from all parties and by several European Ministers. Surely a step-by-step approach should start with a breach of that blanket ban. Gelatine is one thing, but it does not compare with beef. The Minister's present policy is a waste of beef, and a waste of time.

Mr. Hogg: The slaughter of all the cattle involved in the 30-month-plus scheme, for example, is a dreadful waste of beef and money. I have the highest regard for the judgment of Mr. Ivan Yates, the Irish Agriculture Minister. I know him well, and I like working with him. He will be the next president of the Agricultural Council, and I hope to persuade him that it is not in his interests that the ban should be in place for that length of time.

Sir Teddy Taylor: On fruit and vegetables, which we discussed earlier, did the Minister offer his congratulations to his colleagues in the European Union on the fact that the food destruction programme, which last year reached 2.5 million tonnes and was designed purely to keep prices artificially high, appears to have broken all previous records? Will he tell the House straight—as I am sure he will—the cost to the taxpayer of the 30,000 cull that he is proposing, or the larger one that the Labour party supports? May we have some figures as to how much the taxpayer will pay?

Mr. Hogg: In the end, it all depends on the numbers that are brought within the selective cull scheme and the extent to which we can get Europe to contribute to the

costs. Therefore, although I could provide figures, they would be speculative, and not of the solid variety that I know my hon. Friend likes.

Mr. Roy Beggs: The Minister has done his best, but I am afraid that it is not good enough. The simple reason is that it is not in the interests of any other member of the European Union to concede that the blanket ban should be lifted. In order to provide assurance, he should have implemented throughout the United Kingdom the provision that exists in Northern Ireland for identifying our cattle herds.
As he says that there must be progressive lifting of the ban, will he seize the opportunity—where there is a measure of consent in the European Union—to adopt a regional approach? That is the only way to overcome the prejudice that exists, no matter how often we seek to confirm from scientific evidence that all British beef is safe. It is more important to get British beef moving, and I appeal to the Minister to help us—especially in Northern Ireland and Scotland, where we can meet the conditions that are being sought.

Mr. Hogg: I am grateful for the remarks with which the hon. Gentleman began his question. It is perfectly true that Northern Ireland has a traceability and identification scheme from which the rest of the United Kingdom has a great deal to learn. We will have a good scheme in place by 1 June, although it will not be in every respect identical to the one in Northern Ireland.
It is certainly true that the Northern Ireland herds have very low levels of confirmed BSE. However, I have a preference for proceeding collectively, so that the policy that we pursue applies throughout the United Kingdom. The exemption policy that we are pursuing will be of particular benefit to Northern Ireland producers because of the character of the herds in the Province.

Mr. Mark Robinson: I welcome my right hon. and learned Friend's assurance that the cull scheme will start tomorrow. May I urge him to ensure that abattoirs are given the details of the scheme? As of this morning, a major abattoir in my constituency could get no details whatever from MAFF.

Mr. Hogg: My understanding is that all abattoirs have the details; I am sorry that my hon. Friend knows of a case which apparently does not. If he will be good enough to talk to me or a colleague afterwards, we can perhaps make sure that the details are faxed this afternoon.

Mrs. Ann Winterton: I congratulate my right hon. and learned Friend on his brave attempts at the Agriculture Council; but I must tell him plainly that every man and woman in this country can now see that we in this House are not the masters of our own destiny; and that the European Union has nothing to do with fairness or scientific fact and everything to do with politics—as the hon. Member for Bolsover (Mr. Skinner) said—and protecting markets. Every cattle market in this country has been adversely affected by the BSE crisis. Why are there to be only 80 collection points? Every cattle market should be a collecting point, and I want the Congleton cattle market among them.

Mr. Hogg: It seems to me that the Winterton family is, collectively, a powerful advocate of certain causes. I shall


certainly take my hon. Friend's point into account—although without commitment, because I must look at each application on its merits.
I am grateful for my hon. Friend's congratulations. I was right to suspect, however, that they would not be undiluted. I repeat what I have told many hon. Friends today: we have been pursuing the policies that we judge the most likely and the most effective to lift the ban.

Sir Ivan Lawrence: Has my right hon. and learned Friend told his European colleagues that most people in this country think that, if we can be treated like this by our European friends, our membership of the Union is not working well? Has he told them, furthermore, that, as it is unlawful for them to ban our exports, we might consider unlawfully banning their imports? One way we can boost our beef industry is to redirect our exports to our domestic market. If that means banning imports of German, French or any other European beef, so be it.

Mr. Hogg: I have certainly told fellow Ministers in the Agriculture Council and others that a failure to solve this problem would seriously damage relations between the UK and the European Union, and between the UK and member states. I have tried to spell out to my colleagues the serious political consequences in this country of a failure to move on this matter. They know that—I have told them so many times.

Mrs. Jacqui Lait: Does my right hon. and learned Friend agree that, if we were not a member of the European Union but still faced a worldwide ban on our beef exports imposed by individual countries, we would have to negotiate at the World Trade Organisation just as we are negotiating now with the EU? Would that not be infinitely more complicated?

Mr. Hogg: My hon. Friend makes a serious and important point. Of course, we have focused a great deal of effort and attention on the EU ban—the House knows why—but a large number of national bans have been imposed by countries outside the EU. They too need to be dealt with. I believe that removing the EU ban would be an important element in getting at least some of the national bans removed.

Mr. Graham Riddick: Bearing in mind the fact that the EU's ban on the worldwide sales of British beef is unacceptable and perverse, is it not time that the Government, rather than awaiting further good will from our European partners, took active steps to promote the sale of British beef in countries outside the EU, and also took steps to ensure that the bans in some of those countries are lifted? It is action that British farmers and meat traders require.

Mr. Hogg: We have focused on a number of priorities, of which the most important is, I think, to try to bring urgent assistance to the UK farming community, and that we have done in great measure. We have placed great importance on getting the EU ban lifted. There are national bans too that need to be addressed, and we shall address them.

Mr. John Greenway: My right hon. and learned Friend has done as well as anyone could have

done, given the stubborn intransigence of the rest of the EU at the Council meeting. Does he agree that, given all the calls today for direct action, perhaps it is right not to go down the road of a tit-for-tat trade war? It is certainly right, however, to use what powers my right hon. and learned Friend has to ensure that our farmers and agriculture industry have a future.
We need more collection points. We need also a scheme for heifers under 30 months of age. In addition, we need unilaterally to say that we shall have exemptions for cattle over 30 months of age. It would be a grotesque obscenity to see perfectly healthy animals, many bred on grass, being destroyed.

Mr. Hogg: My hon. Friend knows a great deal about this subject, bearing in mind his constituency. I, too, attach considerable importance to what we have been loosely referring to as the exemption policy in respect of 30-month-plus cattle. I would prefer to agree that approach with the EU.

Mr. Bill Walker: My right hon. and learned Friend will not be surprised that many people are saying that the EU is not working, and that it desperately needs reforming. To turn to matters that are under the control of my right hon. and learned Friend in the culling programme, will he confirm that live weight and dead weight will not give a financial advantage to any one sector? If he were to find that there was a financial advantage and the cost to the taxpayer was being increased, would adjustments be made?

Mr. Hogg: The live weight/dead weight ratio is contained in the conclusions of early April. We secured an agreement at the management committee last Friday that we should have a dead weight option as well on the basis of previous conclusions. In doing that, I was responding to strenuous representations from farming unions.

Mr. William Cash: Will my right hon. and learned Friend, who continually refers to persuasion and negotiation, appreciate that there is deep anxiety in my constituency and in all the other agricultural constituencies of the land? Will he bear in mind the fact that, when he refers to urgent assistance, there are some legal remedies that he could employ, or recommend to the Cabinet, including the suspension of payments, which would deal with the Community's cash flow? It would not be a tit-for-tat arrangement, but it would bring to bear on the minds of those representing other member states the realisation that they need our money too.

Mr. Hogg: Of course I am aware, as is my hon. Friend, of the deep anxieties that are felt in rural constituencies, as elsewhere. I have represented a rural constituency since 1979. Indeed, it is one of the most rural of English constituencies. I am anxious to pursue those policies that I deem most likely to bring about a rapid lifting of the ban. I think that I have been doing that. I shall consider any suggestion that is proper, lawful and likely to be effective, but we must consider the consequence of any particular policy.

Mr. David Harris: While my right hon. and learned Friend is undoubtedly right to pursue a policy of


persuasion and negotiation, does he not agree that the lesson of Luxembourg is that, unfortunately, it looks as if such a policy will take a significant time to achieve the right result, and that, as the negotiations continue, we shall be pushed ever further in the direction of following a slaughtering policy for which there can be no scientific justification? Therefore, will he actively pursue other means that are open to him, especially the legal challenge—bringing, I hope, a case in the European Court for interim measures? That would be a test case, perhaps in more senses than one.

Mr. Hogg: I shall of course pay considerable attention to what my hon. Friend says about the legal challenge. That is an important point. On selective culling, I return to two points that I have made on a number of occasions. First, we could properly pursue only a policy that was proportionate in terms of slaughter, and that was targeted. Secondly, any policy must be one to which the agricultural community and the House will give their broad assent.

Mr. Anthony Coombs: On collection points, assuming that a selective cull is necessary, is my right hon. and learned Friend aware of the great concern of farmers in my constituency—indeed in the whole of Worcestershire—that neither Kidderminster cattle market nor any cattle market in Worcestershire has been designated as a collection point? Is he not aware that the already great difficulties caused for farmers as a result of the crisis may be exacerbated by the long-term decline of Kidderminster market if it is not designated as a collection point at this time?

Mr. Hogg: Obviously I am concerned that we should have adequate coverage by way of collection centres. During this afternoon's exchange, four centres have been suggested, and I have a feeling that many others would have been, had you, Madam Speaker, called other hon. Members, so I will not give any commitment in respect of particular markets; but, of course, I take account of what my hon. Friend has so eloquently said.

Mr. Elliot Morley: The Minister has conceded that there are potential welfare problems and that there is a need to ensure the speedy implementation of the measures, which will of course have to he enforced. Given all those factors, is this the right time to make cuts in the state veterinary service's budget? Will he think again about that?

Mr. Hogg: We have made adequate provision to deal with the sort of concerns that are troubling the hon. Gentleman.

Local Authorities (Trading and Competition Powers)

Mr. Gordon Prentice: I beg to move,
That leave be given to bring in a Bill to allow local authorities to trade and compete with private sector providers.
Such a Bill is long overdue. It is needed to clarify beyond doubt the powers that local authorities have to supply services or goods to other organisations. In this vital sector, the law is opaque.
I have always wanted to give local authorities a power of general competence that would allow them to do anything that is not specifically prohibited by Act of Parliament. At present, the position is precisely the reverse. Councils can lawfully act only if the powers have been given to them by Parliament. However, a power of general competence along those lines does not feature in the Bill. It is much more narrowly focused. I therefore hope that it will receive all-party support.
The form of the Bill has emerged after discussions with the Association of Direct Labour Organisations, its director John Roberts, and others. ADLO has a membership of more than 200 councils nationwide, and they are all crying out for clarification of the law. They tell me that they have to negotiate a legal minefield before they can respond positively to requests from local companies or local people who wish to buy their services. Sometimes it is possible, but, more often than not, it is unlawful, and the council must turn down the chance of earning money that could only benefit council tax payers.
Railtrack, whose prospectus is published today, is a case in point. It wanted to contract with councils to cut grass and to remove litter on railway land, but that was outside the powers of local authorities, and the proposal was spiked.
The Bill would allow councils to provide goods and services that are connected with their functions. It would not allow them to set up car companies, for example, in competition with Nissan, or factories to manufacture television sets. However, the Bill would allow councils to acquire premises, appoint staff, and form companies. They would be able to charge for the goods and services they supply, and that has always been a grey area.
These important new powers would be circumscribed by regulations that the Government of the day may consider necessary. The regulations could exclude certain goods or services, or restrict the geographical area within which a local authority may provide goods or services, or may in some way restrict the terms or conditions of any agreement that councils may enter into. I say that for the benefit of Conservatives, who may fear that the new powers would give councils an unfair advantage over other organisations or individuals. The Bill contains plenty of safeguards.
Currently, councils have a restricted range of services in which they can engage in head-to-head competition with the private sector. A council car park is one example. Round the corner from it there may be an NCP car park which is competing head to head for the same trade. However, that is the exception rather than the rule.
Thamesdown Contractors is the trading arm of Thamesdown borough council, and its experience is more typical. It manufactures and supplies PVC window fames,


and can install them in council houses. But if someone exercises his right to buy his council house and wants the council to put in a new set of windows, the council cannot do it, because it would be against the law. That is clearly absurd. There are many other such examples.
Many councils employ arboriculturists to deal with trees that overhang highways or are in public parks. Out of the goodness of their hearts, they often offer advice to individuals on the care and preservation of trees and so on. Sometimes they advise on the design of new developments, but on the strict application of the law, they are unable to respond to requests from local people who want their services and would be prepared to pay for them.
Motor vehicle services are also important. Virtually every council has a fleet of vehicles that needs to be looked after. Why is it not possible for that service to be offered more widely? Councils are well placed to undertake the maintenance of private gardens and sports pitches, but it is legally impossible. The surfacing of private car parks or drives in conjunction with highway work on an adjoining site is possible. It is absurd that a council laying tarmac cannot run it up a private drive whose owner is prepared to pay for it. That is an eminently sensible idea, but it is unlawful.
Many councils grow plants, and the cost to the parks departments of putting in a few extra plants is minimal. Although all the gardeners out there would like to buy plants from local authorities, it is impossible. There are many areas in which people would freely choose to buy services, but the law prevents them from doing so.
I mentioned safeguards. No one wants to see florists, glaziers or local garages put out of business by local authorities, and anyone who suggests that that would happen is misrepresenting the Bill. The councils want the famous level playing field, no more and no less. They do not want unfair advantages. As I have said, the law is opaque. The power to trade is severely circumscribed, and is permitted only by the Local Authorities (Goods and Services) Act 1970, which sets out the limited room for manoeuvre that is open to councils.
The Audit Commission has taken a narrow view of council powers. According to the Municipal Journal, its advice to district auditors has been the kiss of death to direct service organisations. That is true. There are people who take a much less restrictive view, arguing that it is permissible, lawful and sensible for councils to contract to provide services and employ staff to carry out the agreement. Tragically, that has never been tested in the courts. Local authorities have always erred on the side of caution, fearful that they might be visited by the district auditor, who would exact terrible retribution if the council spent money when it had no lawful authority to do so.
The Department of the Environment has confused things even more in a letter that was sent to the local authority associations on 7 December last year. It apparently gives the green light to local authority trading, stating:
It is the Department's view that local authorities have powers to trade for profit and to take on staff for the purposes of those trading activities.
No one knows whether that is a correct statement of the law, but coming from the Department, it has a certain authority. All is confusion.
The Audit Commission is apparently revising its earlier guidance in the light of the Department's letter, although we have yet to see the new guidance. It is all haphazard and unsatisfactory. That is why legislation is needed to clarify the law. Councils up and down the land are hungry for new work and opportunities. They have embraced the contract culture, which will please Conservative Members, and demonstrated that they can deliver top-quality services that people value. My Bill will give powers to local authorities to do just that.

Mr. Robert G. Hughes: The hon. Gentleman called for all-party support. I am on my feet to disappoint him. He went to great lengths to reassure us about how restricted the Bill's scope is but Conservative Members know that if Labour councillors are given new powers, they will abuse them. Labour councils have foreign policies and increased or newly invented allowances for Labour councillors. They run political campaigns on taxpayers' money. Council after council uses double accounting in respect of council nursing homes. It costs more to run, but they are able to put in their books that they charge less for those places.
Of course Labour councillors would welcome the Bill, as they would any extension of their powers. Consider their record. They have failed to spend money wisely: they cannot control expenditure; they cannot collect their council tax; they will not collect their rents; they charge as much council tax as they can get away with; they saddle their communities with debt; and they run measurably worse services. No wonder the hon. Gentleman attacks the Audit Commission, which is what measures how badly Labour councils perform. Now they and the hon. Gentleman want more freedom to wreck their communities.
Labour has always dreamed of councils with the power to do everything, provide any service, and ride roughshod over private providers. Labour simply cannot understand that it is fundamentally wrong for council tax payers to subsidise speculative commercial activities. It would not be the councillors who took the risk, but the council tax payers. When such activities go wrong, as they clearly would, those working in the businesses that the council has done its best to destroy will pick up the bill, having already faced unfair competition, as council tax payers are the lender of last resort.
What is Labour's track record that leads to the Bill's introduction? What would be in its prospectus? Would it be Bradford, where the direct labour organisation paid people who were not even on the payroll? They worked for free for the managers' favourite rugby league side. Presumably to keep everybody quiet, the senior managers were the highest paid in any metropolitan council.
Would it be Darlington, where Labour built a model train with enough bricks to build 44 large houses? Would it be in Goole, where the clerk of a small town council with a budget of little more than £1 million was paid more than a Cabinet Minister? Or would it be Kirklees, which has refined its time for recruiting housing officers to six months, of which 1 am sure it is proud. Or would it be Lancashire, where sick leave cost £12 million last year alone? Instead of spending money on poorer people, it spent £100,000 on a so-called anti-poverty unit. That money would have paid for more than 16,000 hours of home help. What people in Lancashire will get is hot air rather than home helps.
In Birmingham, even a Labour councillor has been forced to admit that the council's budget
is operating in many ways like a slush fund.
That is real Labour in power—real power, real abuse.
The hon. Member for Pendle has, if I may say so, a special place in local government. Before he went to Lancashire, he was in London, where, as leader of Hammersmith and Fulham council, he invented the crazy notion of using debt swaps to expand trading. The point is not that debt swaps were not used before, but the way in which the hon. Gentleman and his council used them—trying to fund extra spending with junk bonds.
Of course, it all went wrong, and probably cost Hammersmith and Fulham council tax payers £97 million. The hon. Gentleman clearly does not like to keep good ideas to himself, as he has shown today. As a Labour party employee, he so enthused other councils with the idea that the total loss in the country probably exceeded £500 million. What a marvellous record for one person.
Before we take the proposal of the hon. Member seriously, we should look at where his previous good ideas have taken us. The Bill is so silly an idea. The House has better things to do, so we should simply let him carry on with it and just ignore him.

Question put, pursuant to Standing Order No. 19 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business), and agreed to.

Bill ordered to be brought in by Mr. Gordon Prentice, Mr. Peter L. Pike, Ms Joan Walley, Mr. Thomas McAvoy, Mr. Neil Gerrard, Mr. Roy Beggs, Mr. David Rendel, Mr. Eric Illsley, Mr. James Wallace, Mrs. Helen Jackson and Mr. Calum Macdonald.

LOCAL AUTHORITIES (TRADING AND COMPETITION POWERS)

Mr. Gordon Prentice accordingly presented a Bill to allow local authorities to trade and compete with private sector providers: And the same was read the First time; and ordered to be read a Second time upon Friday 10 May and to be printed. [Bill 119.]

Orders of the Day — National Health Service (Residual Liabilities) Bill

Not amended (in the Standing Committee), further considered.

New clause 2

LIMITATION OF ANNUAL EFFECT ON PUBLIC EXPENDITURE

'.—(1) In exercising his duty under section 1 and section 2 the Secretary of State shall seek, so far as is practicable, so to manage the transfer of any residual liabilities as to secure that the total of any resulting charges on the Consolidated Fund or on moneys provided by Parliament does not in any one financial year exceed such sum as the Treasury shall by order specify.

(2) The Treasury may from time to time by order vary the sum contained in any order for the time being in force under subsection (1) above.

(3) The power to make an order under subsection (1) or (2) above shall be exercisable by statutory instrument, but no such order shall be made unless a draft thereof has been approved by the Commons House of Parliament.'—[Mr. Galbraith.]

Brought up, and read the First time.

Mr. Sam Galbraith: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Mr. Michael Morris): With this, it will be convenient to discuss new clause 3—

Annual report on effects on public expenditure—
'The Secretary of State shall prepare and lay before the House of Commons a report, in respect of each financial year or part thereof, on the exercise of his duty under section 1 and section 2, with particular reference to any resulting charges on the Consolidated Fund or on moneys provided by Parliament.'.

Mr. Galbraith: The more I consider the Bill, the more I am worried, not only about its operation but about its consequences. My new clause would involve the Treasury right from the start of the process. Important consequences for the national finances are hidden in the Bill. The private finance initiative is basically all about Government bodies borrowing money, but not having it set against the public sector borrowing requirement. That position is untenable and my new clause would reverse it.
When the Bill was first proposed, the Secretary of State for Health tried to maintain that it was merely a technical measure, which he would never have to use. That is a slightly odd position to adopt, because he was in part forced to introduce the Bill. Those who wanted to become involved in the PFI thought that there was a possibility of failure in hospital trusts and other health service facilities, so they wanted a guarantee.
Although the Secretary of State felt that the power might never be used, that was not the view of the financial institutions, construction companies and other private firms involved. Indeed, the more I considered the matter, the more I realised that there were risks of failure in NHS-run projects. It may not be a large district hospital that is affected, although that could happen. It is more likely to be a smaller institution, a facility for caring for


the elderly, a laboratory or a piece of capital equipment. The question then is: on whom does that liability fall? That is not yet clear in my mind.
Part of the reason for the difficulty is that the PFI involves a large number of differing projects with different relationships. We have trouble sorting them out, because the initiatives and contracts involved are secret. None of us knows what they are or who is liable. For that reason, the Treasury must be consulted and must consider laying the liability against the national finances.
If the PFI—which was first developed by the National Economic Development Council in the early 1980s—was about anything, it was to ensure that the private sector adopted all the risk. The cheapest option had to be chosen, and the private sector alone accepted the full risk. That clearly was not acceptable, and the Ryrie rules were changed and were eventually dropped completely. In 1992, the then Chancellor of the Exchequer, the right hon. Member for Kingston upon Thames (Mr. Lamont), reintroduced the concept of the PFI which, under the Ryrie rules, originally dealt with nationalised industry. The right hon. Gentleman reintroduced the concept for other Departments, but again on the basis of some risk being accepted by the private companies.
The right hon. Member for Kingston upon Thames said at the time that the PFI
would remove the unnecessary obstacles to private sector investment in Britain's infrastructure.
But he reiterated that the private sector must generally assume some risk. That again proved to be unworkable, and the position was gradually changed. Today, the private sector will get involved in the PFI within the health service only if it carries no real risk. If it carries no real risk, the NHS will carry the risk and any capital involved should therefore be set against the public sector borrowing requirement. The basis for my new clause is to ensure that that becomes part of the process.
There are some risks involved for the private sector. For example, those involved claim that they must deliver on time. I must say that anyone in business who does not accept the necessity of delivering on time probably should not be in business in the first place. There is the risk of obsolescence, and that is a real problem. As an example, I shall refer to Takare, the company involved through the PFI in Greater Glasgow health board. The company looks after the care of the elderly, and we are locked into a 15-year lease. Some of that model is now obsolete, but we are stuck with it. We can either break the contract—with the risk then falling on us—or persist. Although there is a risk, once again the health service is carrying it.
There is a risk in terms of volume. In other words, the amount of work contracted for might not be available later. Again, the health service will be faced with the risk, not the private sector. If the hospital that has been built does not have enough work to sustain it, we can either close it down and accept the risk or continue with an obsolescent institution.
There are risks also to the public sector. How great are the capital costs? We do not know the risks, the capital costs involved or who has accepted them, simply because we do not know about the contracts. I shall refer to a case that the Minister of State, Scottish Office, who is in the Chamber, will appreciate—Stonehaven hospital. The building of the hospital, the running of its services and the employment of staff are covered by the private finance

initiative. Three bids have been put in for that, yet we are not allowed to see them. The local trust, which also put in a bid, initially intended to make its tender public knowledge, but it has been stopped from doing so by the Scottish Office. All that we as the taxpayers will be allowed from a publicly accountable body is a press release, which we have had, and a little picture of the proposed hospital. That is all the scrutiny that is available to us and to the House.
5 pm
What other financial arrangements are involved in that hospital? What liabilities do we carry? If the companies that are proposing to build it borrow money in order to do so and the companies fall, will we carry the financial liabilities? If we do, we face a serious problem. If such liabilities are not declared in the public sector borrowing requirement, they are being hidden and the PSBR does not reflect the position. We have a financial sleight of hand, a massaging of the figures, as a result of which the increase in the PSBR is not shown and is thus a matter of deceit.
I am more and more of the view that not only will that happen under the private finance initiative, but the Government are already coming round to accepting it. The consultancy for building firms, Beard Dove, in a paper on the prospects of the Scottish construction industry and the Government's private finance initiative of October 1995, says that the Scottish Office should reduce private sector risk in NHS projects. I remind the House that the basis of the private finance initiative is that private financiers accept the risk. But here the consultants are suggesting that the Scottish Office should reduce that risk by developing some formula whereby the capital cost of replacement of material and service elements is reimbursed to the consortia on the actual cost basis.
The consultants, Beard Dove, say:
it is almost impossible to assess the replacement costs of major elements of mechanical and electrical services in a hospital building some 15 years from now.
I agree with that. That is the difficulty. We do not know what the NHS will be like 15 years down the line. Events in the NHS move quickly; that is one of the problems of financing it. That is part of the challenge of the NHS. Businesses will not want to go into it because of that, but that is the risk that they should have to take. That is one of the risks of obsolescence. In other words, they want us to take on the real risk. They want to have it both ways. They want to make a profit, but if anything goes wrong, the public sector will have to pick up the tab. That cannot be right.
But leaving aside that moral-political argument, it is clear from what the consultants are saying that, within such contracts, we shall take on considerable on-going capital costs about which we do not know and which will not be declared in the annual accounts. For that reason, therefore, this matter, and every private finance initiative, must be considered by the Treasury. The sums involved must be set against the PSBR or, at least, each year a certain amount should be set beyond which one cannot go. I know that the Minister will tell us about the external financing limits, but such sums are not part of the external financing limits. They will not be considered. They will be outside the EFL. We have a new capital borrowing requirement. That being so, it must be set against the


PSBR. This is a sleight of hand to massage the Government's books. We must not tolerate it. We must have transparency.

Mr. Hugh Bayley: New clause 2 seeks, rightly, to limit the residual liability that may fall on the Treasury in any one year. Hon. Members on both sides of the House are well used to the existence of cash limits in the NHS. If there is a cash limit on the resources available for surgeons to provide operations for NHS patients, surely we should have a cash limit on the services that financiers provide to the NHS in terms of capital investment.
New clause 2 is necessary because there is an overall cash limit on the money available in the NHS. Every pound that is spent out of the NHS budget on meeting and underwriting the costs associated with residual liabilities, should a trust close or no longer be able to service its obligations to a private sector investor, is no longer available for treating patients. It is a straight trade-off. Each pound can be spent only once. Therefore, the larger the potential residual liability that the NHS has to meet in one year, the greater will be the effect on the availability of cash for NHS patients.
That is not a theoretical concern. The Minister might come to the Dispatch Box and say that, theoretically, that could happen, but that, of course, more than one trust will not go under in a long period. However, I ask him to think carefully about two considerations. First, at the moment we are in the early days of the private finance initiative, and individual trusts, if they have a PFI scheme, will have only one. But over the years, they could develop so that the liabilities, should a trust fail, could be substantial.
Secondly, the financial health of some NHS trusts is—let me put it this way—far from perfect. In the NHS annual accounts, published a month or so ago, the auditor qualifies his audit in a number of ways. One of the notes of qualification is that 36 NHS trusts in England failed to meet their statutory duty to break even. In some cases, their deficit in the year in question, 1994–95, was relatively minor—in one case it was as low as £25,000—but at the other extreme was a trust with a deficit of £8.4 million.
We face the possibility of trusts in effect going into liquidation and the residual liability obligations put forward by the Government in the Bill being put into practice. The trust with the £8.4 million deficit would probably go under with greater liabilities if it had a number of PFI schemes, but if it went under with its retained deficit for the year as liabilities, £8.4 million would be taken away from other parts of the NHS budget; taken away from patients. That is what the House will have voted for if the Bill is enacted without new clause 2. It will be gambling with the cash available for treating NHS patients.

Mr. Malcolm Chisholm: I support new clause 2, perhaps slightly nervously after the contributions of the previous two distinguished speakers, my hon. Friends the Members for Strathkelvin and Bearsden (Mr. Galbraith) and for York (Mr. Bayley), a brain surgeon and a health economist respectively. They obviously spoke with great authority and I want to back up what they said.
I can understand why the PFI has immediately been considered attractive in some ways in the health service, as elsewhere. It appears to get round an immediate borrowing problem. The PFI is very attractive if it can make money available for hospital buildings without running up immediate borrowing. But problems are being stored up for the future, and the new clause addresses one of those problems.
It is perhaps no accident that I am the second Scottish Member to speak in the debate. We seem to be at the cutting edge of the PFI—in Edinburgh, where I come from, and most notably, of course, in Stonehaven, which has been part of an experiment in contracting out all the services in a new hospital to the private sector. There are very serious anxieties about that experiment in Scotland.
The first drawback of operating the PFI in health is, of course, that, to make it attractive to the private sector, there is a temptation to give out as many services as possible, because the private sector can then make more money. Opposition Members find it totally unacceptable that clinical services, such as doctors and nurses—in fact, all the clinical services—at Stonehaven are being put out to the private sector.
Our second worry about the PFI is its long-term consequences. The Treasury Select Committee report on this subject raised concerns that were felt by Conservative Members as much as by Labour Members, because, while the PFI solves long-term borrowing problems, it piles up enormous pressure on future revenue budgets.
I recently had a meeting with a chief executive of a trust that is involved in a major PFI deal, and he explained to me how those contracts are working. He said that there is an increasing amount of revenue payments over the period of the contracts, and that if health expenditure remains flat in real terms, as it has done, there will be a very serious problem in meeting payments on those contracts. So problems are being stored up for future revenue budgets, which may of course translate into problems for services. If the revenue budget is under pressure, there may well have to be a higher patient turnover, and money may have to be saved in other unacceptable ways.
The third anxiety is specifically referred to in the new clause. A greater amount of public expenditure might be involved if the contract fails—for example, if the trust cannot meet its expenses because the referral pattern to the trust has changed or for any of a number of other reasons that we cannot foresee, because we are talking about contracts that may be for 25 years or longer.
The Bill's purpose is to ensure that, basically, the Government meet liabilities if a trust cannot meet them as part of its contract. So a series of potential problems with future expenditure arise through operating the PFI in the health service.
My hon. Friend the Member for Strathkelvin and Bearsden mentioned another anxiety that we have in Scotland. All the bids that have been submitted for Stonehaven, and no doubt for other hospitals subsequently, have been secret, so we cannot scrutinise the small print to discover what is involved. That is another serious concern.
We do not think that a blank cheque should be given by the Government to any trust, to enter into any deal or to borrow on its own to any extent that it likes—up to £5 billion for the country overall. We are very concerned


about that, and we are surprised that a Government who pride themselves on sound finance should be so keen to enter into such an arrangement. I suppose the reason is that they are so determined to go down that route that they are prepared to pay any price.
The new clause represents at least a certain small element of check on the process, and the Government would be well advised to accept it.

Mr. Kevin Barron: My hon. Friend the Member for Edinburgh, Leith (Mr. Chisholm) is absolutely right to talk about the issue of the private finance initiative and clinical services. I shall return to that matter on the Bill's Third Reading later today, if we get that far. We thought that we would get to Third Reading in the early hours of last Thursday, but the Government's Whips, unfortunately—for some inexplicable reason—decided to withdraw the Bill's remaining stages on that day. Nevertheless, we have come along today hoping to finish the Bill's Report stage and Third Reading.
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Hon. Members will know that my hon. Friend the Member for Strathkelvin and Bearsden (Mr. Galbraith) is not only a well respected Member of Parliament, but a very well respected member of the medical profession. Many of us therefore believe that not only it is right for the House to listen carefully to what he says, that we should also give due recognition to what he thinks should be contained in health service legislation passing through the House. On that basis, I hope that the Minister will respond fully to the points that he made.
I should like to examine in turn each of the new clauses tabled by my hon. Friend the Member for Strathkelvin and Bearsden. New clause 2 is straightforward and logical. My reading of it is that it attempts to consider the Bill's real effects on public finances, which is something that Ministers should have considered and acted on during the Bill's passage. The Government have sprung on Parliament this Bill as a reaction to the need to get the PFI moving somewhere—whether in the city, the Treasury or wherever—or to promises of new hospitals. The Bill has, more or less, been an attempt to liven up the Government's PFI, and is not an attempt to find the best way in which to look after the interests of the public purse.
New clause 2 has two effects. First, it requires that the Secretary of State absorbs as few residual liabilities as practicable. Secondly, it states that the total that the Secretary of State transfers to himself, rather than to other health service bodies, should be limited to a maximum amount, specified by the Treasury. Those provisions are entirely sensible. I must say that I am still unconvinced, as are other Labour Members, that we would have proper scrutiny and statutory control of public expenditure in this sphere only if the amount reaches £5 billion. We find that that is unacceptable. The provisions of clause 2 alone are sufficient. I think that the Minister should seriously consider accepting it.
The clause makes a further provision that enhances its importance, requiring that Parliament approves the limit set by the Treasury on total allowable liabilities absorbed by the Secretary of State in any one year.
We have consistently argued that the PFI process is far too secretive. We have also argued that the Secretary of State is assuming so-called "powers" under this Bill that are not powers at all. He is merely gold-plating risk in the private sector—a risk which, he has told us on numerous occasions in different speeches, is a risk that the private and not the public sector should take. His "power" is merely the power effectively to write blank and undated cheques. Even if he is knowledgeable about the sum involved, Parliament is not so knowledgeable. The power is effectively to write out cheques on behalf of the public purse and to hand them to private sector companies through the PFI.
This new clause will limit the extent to which the public purse will be exposed to such blatant rigging of the PFI process, and Parliament will consider what should be the right amount of risk for the Secretary of State to guarantee. It is important that someone does so, because the Secretary of State is not required under this Bill to consider the amount of risk to which he may be exposing the taxpayer.
New clause 3, which was tabled by my hon. Friend the Member for Strathkelvin and Bearsden, further requires that the Secretary of State prepares a report to lay before Parliament detailing how much his gold-plating exercise will cost us. Currently, no one may ever find out how much has been spent on risk transfers to the public sector. No one may ever know how much public money is being siphoned off into the private sector at the expense of the NHS. My hon. Friend's new clause corrects that situation and brings back a degree of openness that is entirely lacking in the Secretary of State's dealings with the House on this Bill.
I believe that these clauses should be considered because, importantly, they bring some semblance of balance and responsibility back into the Bill. It is of some concern that Ministers did not consider the need of the House and the country to ensure that proposed legislation is fair and balanced and that we, as Members of Parliament and the protectors of taxpayers' money, have a say in how that money is spent.
Without these clauses, the Bill is diminished. Parliament will have no say in the way in which possibly billions of pounds may be expended. That expenditure, which ultimately taxpayers will have to pay for, may be virtually unlimited.
The Minister must be concerned about the possibilities raised by the Bill. What will happen when the £5 billion ceiling has been reached—the only statutory protection that exists currently? Will the Government be back for more, asking us to increase the target with as little consultation as we had in setting it in the first place? What will the Secretary of State say when Parliament asks what measures he took to limit public expenditure? What will he say when he is asked why he made no effort to monitor effectively the liabilities being incurred? These clauses would give Parliament such responsibilities. Since they appear to be too much for the Minister and his colleagues to handle, why not let Parliament assist in the process?
We believe that the unwarranted extension to the PFI system in the health service, which the Bill proposes, is flawed. There is no effective scrutiny or monitoring. There is no real accountability and there is certainly no openness. The clauses repair some of the damage that the Bill will inflict. Perhaps the Minister will recognise that


the Bill is unbalanced and irresponsible and that without provisions such as this it will remain so. I hope that the Minister will look favourably on the new clauses.

The Parliamentary Under-Secretary of State for Health (Mr. John Horam): As the hon. Member for Rother Valley (Mr. Barron) reminded us, his hon. Friend the Member for Strathkelvin and Bearsden (Mr. Galbraith) has a distinguished medical career. In view of the nature of the new clause and some of the helpful suggestions that he made in Committee, he might think of a second career in finance should he ever lose his seat in the House.

Mr. Galbraith: Too boring.

Mr. Horam: I agree with the hon. Gentleman. I would rather be a doctor than be involved in finance.
The hon. Member for Strathkelvin and Bearsden wanted to ensure that the Treasury was involved at the start. I can assure him, without fear of rebuttal, that the Treasury is involved throughout all the PFI schemes and I would not have it otherwise, because it looks at these things in a firm financial way. That is right and proper.

Mr. Galbraith: My memory of this debate last week is that the Minister maintained that the Treasury could not possibly be involved in all the issues because there were far too many. Is the Minister saying that the position has changed since last week? Has the Treasury scrutinised the Stonehaven project? I believe that there was a suggestion that the Treasury might be involved above a certain limit. Is it involved in all the schemes, some of them, or none of them?

Mr. Horam: The hon. Gentleman is right. There is a de minimis limit whereby the Treasury is not involved in some of the smaller schemes. For the major schemes, which are the purport of the Bill, it is involved. I remind the hon. Gentleman that about 22 smaller schemes have already gone ahead with the benefit of PFI and that some buildings are already being constructed and equipment is being installed. Clearly, for such small schemes, Treasury investigation is not necessary and the problem of liability on a large scale does not occur. It is only with the larger schemes where there is a possibility of the liabilities in some sense not being transferred that the Treasury is involved.

Mr. John Spellar: For clarification, can the Minister tell us where the limit lies?

Mr. Horam: Last Wednesday I told the House that the figure starts at £10 million, but it can be less than that on a sample basis, perhaps down to £4 million. I believe that, roughly, those are the figures. So the Treasury is involved in the bigger and medium schemes.
The hon. Member for Strathkelvin and Bearsden argued that the private sector was carrying no risk. On the contrary, it is carrying a great deal of risk. If a new hospital is being built and it is not completed on time or there are cost overruns, the private sector will bear the risk under the PFI. With a publicly funded hospital such

as, for example, the Chelsea and Westminster, the taxpayer bears the cost. There were large overruns running into tens of millions of pounds when that hospital was not completed to the budgeted cost.
If maintenance costs are exceeded after the construction of a building, that will be down to the private sector. If there is a facilities management contract, it will have to be performed properly and, if that is not done, the private sector will carry the risk. It is for that reason that these schemes need not be counted against public sector finance. The private sector is taking the burden of the risk just as the public sector takes other risks, such as political risks. It is right to apportion risk in that way. It would be necessary to canvas against private sector finance if there were no risk for the private sector. I accept the logic of the hon. Gentleman's argument, but there is risk for the private sector.

Mr. Simon Hughes: This is a continuation of the debate that we had in Committee. I believe that the argument is flawed when the risk can be limited by contract and the liability under the contract can fall entirely on the contractor. The Minister needs to explain to the House why, in public sector contracts, the NHS cannot enter into a contract that stipulates that the building company takes the risk. That would contract away the risk that the Minister said would fall on the public sector under the present non-PFI system. That can be dealt with in a normal legal and contractual way.

Mr. Horam: To be honest, I do not fully understand the hon. Gentleman's point. The distinction that I am making is clear. We are saying that private sector finance must bear certain risks. If it does not bear those risks, or if the Treasury deems that the amount of risk is unsatisfactory, it will not agree to the scheme, and it will count as public sector finance.

Mr. Hughes: If we take as an example the Chelsea and Westminster or any other old-style contract, of course there is a risk that costs might expand. However, there is no reason why the trust cannot do a deal with the builder saying, "We will pay an all-in figure of, say, £50 million, and anything above that will be your responsibility and liability." That is normal. There are all sorts of building contracts. It happens to be the job that I did before coming here, so I know a little about it. It is perfectly proper to agree an all-in facilities contract or an all-in construction contract. All the risk of any additional cost can be contracted away. Why is it not possible for that to continue in the NHS in the future as it has legally been possible in the past?

Mr. Horam: The fact is that it has not been done in the past. We are taking a road that should perhaps have been obvious to previous Governments. It is a sensible road to take, because it means that we can take the burden off public sector finance.
The nature of the scheme is rather different. The hon. Member for Southwark and Bermondsey (Mr. Hughes), remembering the arguments that we had in Committee, is thinking of a construction scheme. We are not talking about "build and forget", which has been the typical method in the past. We are talking about a continuing commitment. The constructor owns the building and


provides the facilities to support the clinicians. That is the difference between this sort of scheme and the scheme that the hon. Gentleman has in mind.

Mr. Hughes: There are two types of contracts: there are building contracts and there are management, running or facilities contracts—or whatever the Minister would like to call them. I accept that in the past the NHS has not said, "This is the fixed price, you take the responsibility". I am arguing that it is possible to do that without it being done in the private finance initiative way, which says, "You build it, you run it; we are simply an agent, a tenant or a lessee." That would be possible. There is an advantage if the NHS moves into an agreement for the services as opposed to an agreement for the building. However, it is entirely possible to keep that under a traditional contract. That does not make a strong argument for PFI as opposed to any other form of finance.

Mr. Horam: I cannot agree with the hon. Gentleman because it seems to me that what he is proposing is radically different from what has been the traditional pattern of public sector building. We are taking into account not only the construction of the building but also the ownership of the building, the supply of maintenance facilities, et cetera. To some extent, we are comparing apples and pears. The financial arrangements that we are putting forward are consistent with the sorts of risks involved for the private sector.
The hon. Member for Strathkelvin and Bearsden referred to the name of a consultant—I think it was Beard Dove—and he said that private contractors will suggest that the risk be reduced. Indeed, they will say, "We are being asked to bear too much risk in this case"—that is a natural negotiating posture for contractors. The fact is that they have to bear some risk and the amount of risk that they bear cannot go below a certain amount, or it will not be agreed to by the hospital trust or by the Treasury. They may put forward their point of view, but the Government will not necessarily agree to it.
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The hon. Member for Strathkelvin and Beardsden also talked about the Stonehaven example in Scotland and how much information was made available to the public. The bidders can decide how much knowledge of their bid is made available to the public. The health board has conducted a full public consultation about the types of facilities that should be provided and the facilities, in essence, determine the nature of the contract. Beyond that, the details of the negotiations are a matter for commercial confidentiality and the Government do not want to disadvantage the public sector or private bidders in this situation.

Mr. Spellar: Why?

Mr. Horam: It is a matter for discussion and negotiation, and it is not sensible to go into questions of commercial confidentiality when important issues are at stake. I refer to the comments by the hon. Member for York (Mr. Bayley). I am sure that he appreciates that the Bill translates what is at present a discretion into a duty. As we have always honoured the liabilities that we are talking about in the Bill, there will be no increase in the

use of public funds. The practice has been to honour liabilities in the health service and that will not change. The final sentence of the financial memorandum attached to the Bill states:
Given that no NHS trust has so far been dissolved without its liabilities being transferred elsewhere, any additional expenditure occasioned by this Bill is likely to be negligible.

Mr. Spellar: How will this affect the concept of risk? When the Minister replied to the hon. Member for Southwark and Bermondsey (Mr. Hughes), he implied that risk was the danger that the provider of the building and services might fall down on the contract. That is a normal problem; that is not the question of risk that someone may fail to do the job for which they have been contracted. Risk is the danger that the market might collapse or that clients might go bust. By taking away the concept of risk even further, is not the Minister changing this from a PFI contract to an ordinary service contract, which, as the hon. Member for Southwark and Bermondsey pointed out, has always been capable of being operated—whether the NHS has chosen to do so is another matter. Therefore, this is changing the nature of risk in the contracts.

Mr. Horam: As the hon. Gentleman has pointed out, real risk not only involves going over budget on the contract, but involves taking into account market risks or the ownership of a building in which clinical services are taking place. A contractor or a provider of facilities may commit themselves to a contract that lasts a number of years. What the hon. Gentleman has said is absolutely true: there are many kinds of risk in the market. In this case, the private contractor will be bearing all the normal commercial risks.

Mr. Spellar: As the Bill underwrites and acts as the client of last resort, the Secretary of State has removed that major sector of risk in this project. Someone not doing the job is an entirely different issue. Risk is the danger that clients may not be able to pay their bills. That element of risk has disappeared.

Mr. Horam: That is not so—market risk is still there. For example, in five years' time there may not be the same demand for the clinical services that are provided today by the trust or by contractor. That risk will be borne by the facilities provider. He may find that his revenue is less than he expected it to be because the clinical services are not in as much demand as was originally thought. Market risk is still there. Therefore, we are not removing any risk that is normal.

Mr. Spellar: The Government are underwriting it.

Mr. Horam: No, we are not underwriting it. What we are talking about in the Bill is the normal commercial liability. [Interruption.] No, the hon. Member for Stockport (Ms Coffey) is quite wrong. Obviously, any organisation honours the liabilities that it properly enters into—that is, it fulfils the contracts that it makes. That is what the NHS has always done. However, it has been discretionary and it is right that we make what is de facto de jure to reassure the people who are involved commercially that there is no political risk. The Bill


removes that element of political risk—it does not remove the normal commercial risk. I hope that the hon. Gentleman understands that.

Mr. Spellar: I understand the answer, but I am not entirely satisfied by it. There will be long-term contracts between the hospital trusts and the providers of the services. If, for example, the contract changes between the area health authority and the trust it may lead to the trust experiencing severe difficulties, which may lead the Minister to take action to do something about the trust—to dissolve it or whatever.
Therefore, the Minister is standing behind the contract and saying that the Secretary of State will act as the guarantor of the contract. Because of the size of the contracts—the Minister says more than £10 million—they will be long-term. Therefore, the Secretary of State will be acting as the final guarantor and removing that element of market risk.

Mr. Horam: No, that is not the case—we are not removing the market risk in any way. The Bill says that a contract properly entered into will be honoured by the NHS trust or by the Secretary of State in the final analysis. That is a perfectly normal practice and it means that the NHS will not welsh on its debts. However, the market risk will still remain. I cannot continue repeating this—it is absolutely clear to me.

Mr. Barron: Will the Minister further explain what political risk he is underwriting? Is it the possibility that there may be a change of Government in the not too distant future?

Mr. Horam: The hon. Gentleman is not rising to the level of the occasion. Political risk is perfectly plain: under the previous situation, the Secretary of State could walk away from his debts—that is, when a trust ceased to exist or was merged, he could decide not to honour its liabilities. He is simply saying that, in future, he will not be able to do that. That is an honourable and straightforward position. It has always been the case; it would always be the case. We are simply putting it into law.
I described that as political risk. It would be wrong for a commercial organisation to accept that political risk, because a commercial organisation is not the right body to accept that type of risk.

Mr. Galbraith: I am becoming more confused as the debate progresses.
Let us suppose that, 25 years ago, a PFI had been entered into with a health authority or trust to build a tuberculosis hospital, but that the disease was not as prevalent as it used to be and the hospital was no longer needed. Is the Minister saying that, if the hospital had been built—perhaps managed—under a PFI initiative but the trust did not want it, or if it had been agreed with the health authority but the authority did not want it, the Government would be liable to pay the necessary capital and running costs for that hospital for 25 years, even if, after five years, it was no longer needed? If so, we are building lack of flexibility and obsolescence into the system.

Mr. Horam: No, that is not the case. All the Bill does is to make what is de facto de jure, by saying that

contracts properly entered into will be honoured by the Secretary of State. It is as simple as that. That is a very simple point, which I am sure that the House agrees with. I do not think that any Opposition Members—

Ms Ann Coffey: He cannot want us to agree.

Mr. Horam: The hon. Lady served on the Committee and sat through three or four sittings. If she does not understand the simple point of the Bill now, I am afraid that I cannot begin to explain further.

Mr. Barron: Let us get away from the issue of political need. It is unprecedented for any Secretary of State not to meet a public sector debt, and contractors and suppliers of the national health service have been content in that knowledge for decades, so why do we have the Bill? Who insisted on it—the Secretary of State for Health or the private sector?

Mr. Horam: The hon. Gentleman knows the answer, because my right hon. Friend gave it to him on Second Reading. The hon. Gentleman has had it once; he does not need to have it repeated. In this specific case, it was unreasonable to expect the private sector to take on risk that it was not equipped to adopt. That is the simple position, and this is an extremely simple Bill, which does precisely that.

Mr. Simon Hughes: I want to clarify two last things. The Minister says that the simple and single purpose of the Bill is to prevent an agency—a part of the Department of Health—from walking away from its financial liability by dissolving itself, and that therefore the Bill will provide a guarantee that the Department of Health will pick up the tab.
How many times in the past has the Department of Health or an area health authority, regional health authority or NHS trust not paid its bills? Has it ever happened in the history of the Department of Health, since the creation of the NHS?

Mr. Horam: I am afraid that my memory does not go back quite as far as that, but, off the cuff, subject to the usual reservations, the answer is no—there has never been a case where properly entered into liabilities have not been honoured.
The hon. Member for Edinburgh, Leith (Mr. Chisholm) was worried about the Stonehaven example, but he should recall that, at the moment, that is still only a proposal. There are three bidders for the contract, one of which is the NHS trust. Indeed, in a sense there is no likelihood that clinical services will be privatised, because all the medical services—the core services and the wider group—will be provided in the usual NHS way. That is not yet an example of privatisation, and it may never be an example of privatisation in the way the hon. Gentleman means.
Finally, I shall reply to the points made by the hon. Member for Rother Valley and make some comments about the new clauses tabled by the hon. Member for Strathkelvin and Bearsden.
On scrutiny and control by Parliament of the private finance initiative and the public sector, I emphasise that there are already mechanisms for giving regular


information on expenditure and liabilities to the public and Parliament. The annual estimates and appropriation accounts procedures set out clearly the way in which moneys provided by Parliament are used. The annual departmental report gives more detail to Parliament about that. Among other things, it specifies contingent liabilities, as defined in the terms of the agreements between the Government and the Public Accounts Committee.
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Auditors of trusts are required to confirm that the accounts give a true and fair view of the state of the trust. All borrowing within a year and loans outstanding at the end of the year are disclosed in accounts.
The Comptroller and Auditor General scrutinises and summarises the accounts of the trust sector as a whole, and lays them, with his report on them, before both Houses of Parliament. That is the conventional accounting system between Parliament and Government.
The Treasury Select Committee recently recommended, in the context of the PFI especially, that an annual report shall be prepared by the private finance panel, reporting on projects undertaken. The Committee also asked for details of the process that the Treasury plans to set up to monitor the revenue commitments of the PFI. Those two things came out of the Treasury Select Committee. I am glad to say that the Treasury has already said that it will set up a monitoring system; no doubt it will cover that in its formal response to the Treasury Select Committee.
The National Audit Office plans to conduct value for money investigations into PFI schemes. As I was a member of the Public Accounts Committee for three years, I know how searching such investigations can be; if there are any problems with the PFI, they will certainly be thrown up by those investigations.
I agree with the hon. Member for Strathkelvin and Bearsden that this is a proper matter for Parliament. It is appropriate that he, as a Back Bencher, should make that proposal, because the scrutiny and control of expenditure in this way is a matter that it is certainly legitimate for Parliament to consider.
As I have shown by citing those examples, the hon. Gentleman is pushing at an open door. In future, not only will there be the traditional methods of considering Government expenditure but, as a result of the Treasury Select Committee's recommendations and what was said by the National Audit Office, new methods will be used to add to that stringent scrutiny. In those circumstances, I hope that he will agree that Parliament is moving sensibly to scrutinise and control that expenditure. I therefore believe that the hon. Gentleman's new clauses, although well-meaning, are unnecessary.

Mr. Galbraith: Having heard the Minister, I am convinced that the public finance initiative is a shambles. The more I hear about it, the more confused I become and the more I realise that I am not the only one who is confused. The Government will regret the monster that they have set running, especially in the national health service.
I return to my example of the privately funded tuberculosis hospital. I only take that as an example—obviously it is obsolete nowadays.
If a private finance initiative were to set up a hospital, in my view it would provide that hospital—the Minister also envisages that it must run the services and manage it as well because that is how it makes its money. In my view, the private company should set up the hospital and run it and say, "There you are, we will run this for you and the cost will be so much per year"—the normal yearly contracts.
However, because that would involve an element of risk for the company, it requires us to remove that risk absolutely and locks us into a contract for 25 years, to which we are committed and for which the Government will now pick up the tab irrespective of what happens. We are now locked into a contract that ensures that the private company has no risk. The wee bit of risk associated with it—never mind the delivery risk, which I did discuss—should be a usual part of business anyway. Instead, it will lock us into a contract involving no private risk.
If the company were to have risk, it would be a year-on-year contract, because that is the nature of medicine. That would be the correct thing for the health service to determine. Medicine moves swiftly. Diseases become obsolete; diseases move off. For a long time, cardiac surgery fell away because rheumatic heart disease had fallen; the complications of valvular disease were no longer around. We did not need cardiac surgery, and a number of units were closed, but then the incidence of coronary heart disease increased again—variations occur. Through the PFI, the Government have prevented us from being able to move with the variations; we are locked into a contract for a hospital that we have guaranteed and we have removed all the risks from the private sector. The Government have also shifted capital moneys into revenue account—that is how it will appear. With finesse, they have massaged the figures once again.
The Government will come to regret the provision and the comments that they have made today; their persistence will return to haunt them in future years. However, having said that, I have no wish to pursue the matter further or to divide the House. I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Clause 2

TRANSFER OF RESIDUAL LIABILITIES: SCOTLAND

Mr. Barron: I beg to move amendment No. 1, in page 1, line 6, leave out 'ceases to exist' and insert
'is dissolved or abolished by the Secretary of State'.

Mr. Deputy Speaker: With this, it will be convenient to discuss amendment No. 2, in page 1, line 16, leave out 'ceases to exist' and insert
'is dissolved or abolished by the Secretary of State'.

Mr. Barron: I do not intend to keep the House too long as the purpose of the amendment is plain. We are concerned about the meaning of the phrase "ceases to exist". In Committee, we probed the issue at some length. The Under-Secretary said then that our amendment was defective and his answers were unsatisfactory. In the light of his comments, we have reworded the amendment.
The nub of the problem is that the phrase "ceases to exist" is vague and open to misinterpretation. We are concerned that the phrase has been placed in the Bill to


cover eventualities of which the House would take a dim view were they to happen. We wish to be assured about one matter in particular. If a trust could go bankrupt, or into receivership, without or before action having been taken by the Secretary of State, the House should be told about that now. If the phrase "ceases to exist" means anything other than the dissolution or the abolition of the organisations covered by the Bill, the House should be told now.
We recognise that the original National Health Service and Community Care Act 1990, to which the Bill adds, made it appear unlikely that a health service body could cease to exist without specific action by the Secretary of State for Health. We are concerned that the organisations covered by the Bill are being treated to different phraseology from that in the originating Act. Dissolution and abolition by the Secretary of State are the ways in which trusts and health bodies cease to exist. The Bill appears to open the door to other ways in which those bodies may come to an end. The clear implication of the wording is that the health service bodies covered by the Bill may come to some sort of sticky end without the Secretary of State's approval, and that such events may not be clearly within his control, as they are under the current Act.
It is an implicit admission by Ministers that they may well lose control of private sector involvement in the health service. Profit-dominated organisations may hold sway over our health care and a private contractor's bottom line may determine the continued provision of certain local health services. If that is not the case, the Minister has plenty of opportunity tonight to give us the correct position.
I have taken legal opinions from various sources on the phrase "ceases to exist", and they have given contradictory views on the interpretation of that phrase. The Minister will recall that my colleagues and I warned him in Committee that the phrase might open the floodgates to legal challenges should the Bill's provisions ever be used. It seems that the differing legal opinions that I have obtained may reinforce that warning.
In Committee, the Minister argued that the phrase "ceases to exist" was an umbrella term, but the umbrella term already exists in law—in part IV of schedule 2 of the National Health Service and Community Care Act. That Act defines the Secretary of State's powers as being exercisable, if considered appropriate,
in the interests of the health service.
Why, then, has the second term come into being? Perhaps the Minister would like to argue that his phrase puts in plain English the occasions on which the powers granted to the Secretary of State under the Bill may be exercised, but it is surely an extremely unusual definition of plain English that confuses, rather than clarifies, the position.
Amendments Nos. 1 and 2 make the position clear. They insert in the Bill the concept that trusts and other bodies can come to an end only after the Secretary of State for Health has exercised a specified, positive

powers. Our amendments suggest that "dissolved or abolished" is the term that effectively covers the exercise of those powers. That is real plain English. Both terms are well defined in the legislation and neither is open to misinterpretation by the courts.
There can be no reason to object to the amendments unless the phrase "ceases to exist" is in the Bill for some purpose other than plain English. Will the Minister assist the House by placing it on record that the Bill covers only the following eventualities: first, that a national health service trust is dissolved by the Secretary of State for Health; secondly, that a health authority or a special health authority is dissolved by the Secretary of State? If there are any other ways in which the Bill's provisions can be activated, the House must be told, and the Minister has the opportunity to do so in this debate. He must take this opportunity to assure the House that the continued day-to-day existence of national health service organisations lies with the Secretary of State and the powers invested in him through Parliament, the electorate and the British people.
If the Bill transfers risks from the private sector to the public, rather than the other way round, it already breaks the fundamental principle of the PFI. It already guarantees that the private sector will have an apparently unfettered line of credit from the public purse. Now, there is a further threat to the provision of health care and to the continued existence of the national health service, and it is no slight matter that that uncertainty is intended to be written into law.
The national health service does not need the uncertainty caused by the Bill's existing wording. The amendment helps to re-establish the principles of continuity in health service provision that we all wish to see. Sadly, continuity has not been a major feature of the Government's attitude to health care. The Secretary of State has not been backward in exercising his powers to dissolve, merge and establish trusts and, to some extent, health authorities.
There are frequent revisions to originating capital debt—given levels of interest-bearing loans and public dividend capital—as well as changes to external financing limits and various guarantees from the Secretary of State. Most of that process is designed to prop up the internal market and most of it simply adds resources to the bureaucracy at the expense of front-line patient services. Unless the Bill is amended in the way that we suggest—or by some similar wording, perhaps at a later stage in another place—that tangle of financial directives, limits and guarantees will be balanced all the more delicately against a crash.
The private sector, not the Secretary of State, will have the upper hand in determining whether a health service body crashes or survives. The Secretary of State will be giving away his ability to act positively, by abolition or dissolution, and will be left with no other duty than to pay off the debts and pick up the pieces.
It is a disgrace that the Bill has been introduced in order to prop up the PFI and to avoid answering major questions about the future of the national health service and its bodies. We seek a coherent definition of the circumstances in which the Government envisage using the powers that the Secretary of State proposes to take. The phrase "ceases to exist" does not provide any such


clarity or assurance. Our amendments Nos. 1 and 2 are far superior, and I urge the Minister to look upon them favourably.

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Mr. Horam: I agree with the hon. Member for Bother Valley (Mr. Barron) on this occasion. I do not think that there is any difference between the two sides about the matter and I can give him the assurance that he seeks.
All NHS bodies covered by the Bill are creatures of statute: they can be established and can cease to exist only by statutory procedure. The existing NHS Acts listed in the notes on clauses to the Bill provide the means by which those bodies can cease to exist. There is no other way, short of an Act of Parliament—which would come before the House—that they can do that.
The hon. Gentleman asked whether an NHS trust could go into receivership. That cannot happen—as a statutory body, insolvency legislation does not apply to an NHS trust. It can cease to exist only by the statutory procedure that involves the House. Therefore, I give the hon. Gentleman the assurance that he seeks: there is no other way in which such bodies can cease to exist, and we do not seek to enlarge that process.
I assure him that we mean nothing sinister by using that phraseology. It is a matter of semantics and of using what we believe to be plain English. If the hon. Gentleman's measures were adopted, wherever the phrase "cease to exist" appeared in the Bill, it would be replaced with "dissolved", "abolished" or "revoke the establishment order of'. That is quite a mouthful. We are on common ground in talking about simple, straightforward terms that cannot be misinterpreted in law. I repeat that they are statutory bodies that can cease to exist, only by statutory procedure.

Mr. Barron: It is a great pity that the Minister did not provide that explanation when we discussed the amendment in Committee. He did not explain his position as succinctly as that then. I am sure that the House will be reassured by his comments. We will not argue over the Dispatch Box about what constitutes plain English. The Opposition and the people of this country—who dearly love the national health service—want to be clear that major decisions about local health services will be taken by the Secretary of State for Health and not in a banker's office or anywhere else in the City. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Order for Third Reading read.

Mr. Horam: I beg to move, That the Bill be now read the Third time.
The Treasury Committee's verdict on the private finance initiative is that it is an imaginative and laudable innovation. It will bring forward the rebuilding and re-equipment of our major hospitals on a scale hitherto believed impossible. The last two projects that we announced—Swindon, which would have cost £90 million, and Norwich, which would have cost £170 million—will probably be built five years earlier than anticipated.

Mr. Barron: That is outrageous.

Mr. Horam: No, it is perfectly true, and I shall explain why. Until now, all schemes—however good and in spite

of the approval of trusts, health authorities and Ministers—have had to wait in a queue for money. There was one turnstile and the Treasury controlled it. It had a monopoly on the supply of capital funds. Under the PFI, there will be any number of turnstiles and any number of competitive suppliers of finance—there will be no, or certainly shorter, queues. If a scheme is affordable and represents good value for money, it will go ahead. That has not occurred in the past, and clearly more schemes will now come forward.
As the House knows, in the past 10 years only one scheme worth more than £25 million went ahead each year—which is still better than the last Labour Government's record. Now, no fewer than 25 schemes, each worth more than £25 million, will go forward. If even half of those schemes are completed—I suspect that we shall complete more than that—other much desired projects will come forward at a much faster rate.

Mr. Simon Hughes: rose—

Mr. Horam: No, I shall not give way. I have given way to the hon. Gentleman several times today.
More hospitals will be built, and they will be built better. It is no longer a matter of build and forget. The private sector will not only build the hospitals but be responsible for their on-going maintenance. That will provide the incentive to build them well and thus minimise maintenance costs—which is a good thing.
As the hon. Member for Strathkelvin and Bearsden (Mr. Galbraith) said, hospitals will be built more flexibly. Ownership of hospitals in the private sector will provide the incentive to ensure that they do not become white elephants within 10 years. Hospitals will be built using flexible designs that can be adapted to new uses as clinical measures develop. For example, the new Jimmy's hospital in Leeds is being built in such a way that it can be used for other purposes. There will be better hospital designs. I recently attended a conference of the Royal Institute of British Architects and architects' enthusiasm for the new design culture that we are bringing to the health service was evident. That is very heartening.
There will be less risk for the public sector. As I have said during today's debate, the risk to the private sector will increase because it will bear the burden of commercial risk which is borne by the taxpayer at present. For example, the taxpayer had to meet the cost overruns associated with the building of the Chelsea and Westminster hospital. The public and private sectors will be in partnership, a partnership that we encourage. The Opposition claim that they also support such a partnership—although they do not seem to do so in this case.
The national health service will have the opportunity to concentrate on what it does best: provide clinical services free at the point of use. It will determine its own priorities in its own way. Therefore, the NHS will be able to realise its ambitions for providing better patient care—which is ultimately what it is all about. The Bill helps the PFI to succeed. I recommend it to the House and I urge hon. Members to support it.

Mr. Barron: The Bill has only one purpose: it is an attempt to breathe life back into the Government's failed private finance initiative in the health service.
Hon. Members and the general public know that, in its current form, the health service PFI is little more than an attempt at privatising the NHS by the back door. The Bill is an attempt to revive the privatisation of the health service which has been rejected categorically by clinicians, most NHS staff, patients and, increasingly, the private sector.
In general terms, we know that the private finance initiative is being used not as a supplement to, but as a replacement for, public provision. Opposition Members have argued consistently that, if the PFI has a role to play, it is in supplementing the existing Government capital expenditure budget for the national health service. We know that the PFI is a twisted and a distorted attempt to mirror the properly thought-out joint partnerships between the public and private sectors which have been suggested by the Opposition.
In health terms, Ministers have tried desperately to kick-start the PFI as the Government's years of neglect of the national health service have come home to roost. The Bill is the result of that. Ministers know that, in the period before the general election, they need to show the voters that foundations are being dug and bricks are being laid and that alleged new hospital projects are under way. We heard that again from the Minister tonight.
The groundwork has already been done, but only in the minds of Ministers. Successive Ministers have been announcing for years the same so-called new hospitals, yet not a single brick has been laid. In his speech tonight, the Minister had the audacity to mention Norwich and say that the new hospital that is badly needed will be built five years ahead of plans because of the private finance initiative.
Let us look at the truth about Norwich. The former Secretary of State for Health, now the Chancellor of the Exchequer, was first off the starting blocks when he announced the go-ahead for a new £100 million hospital in Norwich. That was in 1990. On 3 April this year, the current Health Secretary announced that he had "given the go-ahead today" for a new hospital in Norwich.

Mr. Henry McLeish: Perhaps there will be two hospitals.

Mr. Barron: Two hospitals may have been promised, but no bricks have been laid on any of the sites. The second audacious announcement was made when we debated the Bill on Second Reading.
In December 1993, the then Secretary of State announced that he had approved a project to replace the Princess Margaret hospital in Swindon. On 3 April this year, the current Secretary of State issued another press release headed "Approval announced…for Swindon hospital". Health Ministers constantly claim to be building hospitals, but those hospitals exist only in their minds. Norwich and Swindon are just two examples of the cynical ploys that Ministers adopt in their efforts to look good on health matters.
Will the Minister tell us whether the latest announcements promising new hospitals will ever materialise? Perhaps he will tell us the difference between his assurances today and, for example, that given by the former Secretary for Health about Norwich, that
construction is expected to start in 1992.

That year might ring a bell with hon. Members, as it was an election year.
Will the Minister and the Secretary of State be promising that the construction of the new hospitals that they have promised will start in the next 12 months—in advance of the next general election? Who does he expect will believe him? Multiple announcements of so-called new hospitals do not treat patients. Press releases are not pain relievers, however much Ministers would like to think otherwise.
The Bill shows that Ministers will go to any lengths in their attempts to persuade the electorate that theirs is a caring Government, but the electorate and the House know that that is not so. The Bill breaks the most basic principles of the PFI. It opens up the possibility of the private sector closing down parts of the health service to further profitability. It denies Parliament a proper role in scrutiny and removes any notion of accountability.
The basic principles of the PFI are unequivocally stated in a NHS executive letter of 20 March 1995, which states:
A fundamental principle of the PFI is transfer of risk to the private sector.
The Bill does exactly the opposite. It commits the Secretary of State to guaranteeing totally and absolutely all the risks that are supposedly transferred to the private sector. It removes not one risk from central Government, yet it gives central Government virtually no role in assessing the risks that they have assumed.
It is universally acknowledged, even by the Secretary of State, that private sector services cost more than public sector ones. The right hon. Gentleman said that in his speech to the Royal College of Physicians. In the same speech he said:
I am strongly in favour of testing public and private sector solutions and adopting the approach which offers best values.
I am asking the Minister to consider two identical projects. In each case, the risk falls entirely on Government, but the capital costs of one are more expensive. A normal, right-thinking person would choose the cheaper alternative, but the Bill creates circumstances in which the only possible option will be the more expensive one—the private sector project. Perhaps the Minister will explain the logic that he uses to conclude that that is the best possible future for the health service.
How can there be any justification for spending more money on the PFI alternative when it produces no benefit in terms of reduced risk? Clearly, there is no justification, unless, as we all suspect and Ministers occasionally let slip, PFI is a step on the road to the privatisation of our national health service and the Bill is designed to ease that route.
Already, the road to the NHS privatisation is clear. First, the Government starve a service of funds. The national health service capital programme has been cut by nearly 20 per cent. Secondly, pressure is applied to consider alternatives. All trusts have had to go through the entire process of testing major projects against private sector finance, regardless of the urgency of those projects. Thirdly, the pressure is racked up. In health, the fine line is continually blurred between what may or may not be possible targets for market testing, contracting out and privatisation.
On Second Reading, I complained that the Secretary of State had not responded to my letter of mid-February asking him to identify those services that would be exempt from PFI. I had the opportunity to ask the same


question in Committee, as it is important that we are clear about the scope of the PFI. The reason for that is illustrated by what my hon. Friend the Member for Strathkelvin and Bearsden (Mr. Galbraith) said about the hospital in Scotland where everything is being put out to tender. Although the Minister's defence seemed to be that one of the three bids being considered was from the NHS, we understand that every service is being put out to tender.
The Secretary of State is still reluctant to define clinical services. He knows that he has promised to protect such services from privatisation, but he does not want to do that. He knows that, if he has to list which services are clinical, he will be limiting the scope of privatisation. That would place question marks over the bids for Stonehaven hospital.
When an answer to my letter finally arrived—unfortunately, the day after the Committee stage had ended—it was not particularly helpful. The Secretary of State wrote:
The requirement to include clinical support services as part of the testing of the PFI options are matters for local determination and cannot be decided without the support of local clinicians.
What can local clinicians hope to make of the Government's attitude? How can they hope to work within boundaries that the Secretary of State has blurred almost beyond distinction?
The Bill is being proposed to smooth the jangling nerves of potential PFI contractors. The Government hope that more of them will propose new PH projets in the health service. However, about a fortnight ago the Financial Secretary to the Treasury told us on "Newsnight" that the PFI will replace public expenditure.
The blurring of choices means that local clinicians and other health service professionals are faced with a stark choice—private money or no money. One way to guarantee that a clinician will ultimately agree to the PFI is to starve him of funds to improve the services that he wants to give his patients. That is how it is being achieved; it is driven by withholding from clinicians the vital investment that they need to improve health care. It is a pity that the Secretary of State is not here, but I must tell him and the Minister that that is not the way to treat health professionals or issues of public health. I call on the Minister this evening to list all the clinical and clinical support services that he can guarantee will be free from the risk of privatisation.
The Government are driving towards privatising the NHS, and are stepping up the pressure to achieve their aims. The Bill makes matters worse. It is not just this Bill that is adding to the Government's PFI woes. The private sector is getting increasingly annoyed about it, despite all the concessions that the Secretary of State is prepared to offer it. Earlier today, the Minister said that the Treasury was involved in the PFI. John Laing Construction was recently reported in the Financial Times as having described the PFI regime as
farcical and leading to growing frustration among contract bidders".
Laing is one of the leading bidders for health schemes, so its opinion must be taken seriously.
Martin Laing, the company chairman, said that there is
virtually no chance
of PFI targets being met
unless there is a really big shake-up in the way the Government handles PFI projects".
Another PFI specialist, a City banker, is quoted in the same report as saying that the PFI needs
to overcome the inertia and lack of expertise that reign supreme in most departments".
We already know that the public do not trust the Government on the PFI, and that clinicians and health service staff do not either. It now transpires that even the private sector does not trust the Government on the PFI.
The Secretary of State will have big problems if he intends to put all his NHS eggs in the PFI basket—but that is what he is doing. He is betting everything on the Bill and on its option of guaranteeing liabilities over which he has no control. The Bill solves none of the problems of the PFI and probably creates a whole new set of its own.
Still, I have little doubt that this Secretary of State will eventually get his way and that the Bill will be passed. After it has been railroaded through the House, he will be able to go back to the private sector contractors who demanded the Bill and tell them that it is safely through and that the Secretary of State has underwritten the risks that most people thought went with the contracts. 1 only hope for the right hon. Gentleman's sake that the contractors do not come back to him with yet another problem to solve. If and when they do, I hope that he will not cave in to them as easily as he did with this Bill.
The House deserves a better explanation of a Bill than the one we were given on Second Reading. It was disgraceful of the Government to talk about technicalities without telling us the public expenditure implications.
The next problem may arise in the context of information technology. The Department is already creating a shambles because of its unwillingness to get a grip on strategic provision. The recent trauma over hospital information support systems was just the latest in a long line of failures. Now we hear that the entire PFI growth area of information technology is under threat from the VAT man. PFI-led IT projects may turn out to be not just more risky and expensive than publicly funded alternatives: they may have an extra 17.5 per cent. VAT dropped on the final invoice too.
Many of the projects that the Minister has said are in train at the moment include small information technology units. Now there is a debate between the Treasury and the Inland Revenue about whether, as they will not be owned by the trusts, they ought to attract VAT. Ludicrously, the Government consistently say that they are in control of the PFI, but as soon as people are ready to sign contracts, all of a sudden 17.5 per cent. VAT is dropped on them. How can anyone have faith that the Government know what they are doing?
Perhaps, as the Secretary of State has already gerrymandered the PFI rules once, there will be another sweetheart deal for the private sector in health. Perhaps he will siphon off more NHS money to pay the contractors' VAT bills. The Opposition will not let this issue go away. It may be deemed the concern of the Treasury, but it affects public health, and we shall ensure


that the matter is not dropped. I only hope that the Government will introduce some coherence to what is happening with information technology under the PFI.
We are witnessing a long slide into confusion—a slide that the Minister cannot control, because the Bill gives him few or no powers, except to accept the consequences. The Minister has started down a slippery slope that may cost taxpayers billions of pounds, and there may be no end to the slope. The Bill represents a fundamental error of judgment. The Minister has been weak when a secure future for the health service required him to be strong. He has pandered to the private sector instead of supporting the best interests of Britain's health care.
The Bill offer gilt-edged returns to the private sector but does nothing for patients, nurses, doctors or health care. It merely bails out the Government's drive to privatise the health service. The Bill offers Parliament no openness, no accountability and no scrutiny. Contracts for up to 70 years will be signed—70 years of private sector risk but no parliamentary say in the matter. Who in his right mind, looking at developments in the NHS of the past decade, would allow that to happen? We are signing up to 70 years of public liability without a debate in the House on the daily innovations in the health service aimed at improving it.
There will be up to £5 billion in liabilities, and no parliamentary say in how or why they are incurred, and no chance to hold the Secretary of State to account for bailing out the private sector and, effectively, privatising the NHS.
The Bill is ill thought out and—I hope that I am wrong—the public purse and the people who need health care may find themselves paying for the Government's folly for many years to come.

Mr. Galbraith: On Second Reading, I was prepared to give the private finance initiative in the NHS a fair wind and some consideration, but having sat through most of the Bill's stages I am now convinced that it is wrong. What has emerged from my confusion—Conservative Members may be confused as well—is that this is being done for short-term financial reasons while building in long-term liabilities. We are converting capital expenditure to revenue that will be with us for a number of years, and future Governments and generations will have to pick up the tab.
The PFI has other consequences too. Having heard the Minister, I am convinced that what is involved is a distortion of service provision within the NHS. I return to the idea of the hospital in my area becoming obsolete. In order to remove risk from the private sector, long-term contracts will be awarded whether or not the facility is needed. To avoid its becoming a white elephant with unoccupied wards and beds, NHS facilities that may be better prepared and more suited to people's needs will have to be closed so that the hospital built with PFI money can be used. This represents a drift, once again, away from a more effective and efficient NHS towards the private sector—one of the major problems associated with the PFI.
It is also clear from what the Minister said that the PFI will not be involved only in building and leasing buildings. He mentioned maintenance and the provision

of services. After all, they are the only way in which money can be made in such ventures. The Skye bridge is a case in point; once it was built, it had to be run and charged for at rates higher than those charged by the ferry. The risks had to be removed from the private sector by locking into a long-term contract to enable it to recover its expenses. The Skye bridge was built only when the Government gave an undertaking that the profitable public sector ferry would cease to run, so as not to be in competition with the bridge. Within the national health service, public sectors will be closed to maintain the PFI project.
It serves no purpose for the Minister to maintain that clinical services will not be affected. It is clear that they will be an integral part of the PFI. Stonehaven is a classic example. We know that everything is up for grabs at Stonehaven. That is part of the Government's philosophy. That is the trend and that is the way in which the Government see the NHS continuing. The cat was let out of the bag by Duncan Nichol.

Mr. Bayley: The position has been made clear by the Secretary of State. On 21 November 1995, he spoke to the Royal College of Physicians. During his address, he said:
Some Trusts have explored local arrangements for private sector provision of some clinical and clinical support services. That is a matter for local determination.
The right hon. Gentleman is sanctioning precisely what my hon. Friend fears.

Mr. Galbraith: I fully agree with my hon. Friend.
I mentioned Duncan Nichol, the former chief executive, who is responsible for the shambles within the NHS. He now works in the private sector with BUPA. In effect, he says, "It does not matter who provides the service. The issue is what charge is made when the service is delivered." The Government no longer talk about services being free at the time of need; they talk instead of services being free at the time of delivery—in other words, they are saying, "Although you need them you might not get them, except those that we decide to deliver."
The shift towards privatising clinical services and allowing individuals to have those services paid for by others will soon mean that individuals will have to take out private insurance. That will take us fully down the line of a privatised health service. That is part of the purpose behind the Bill. The Bill is not merely a short-term fix to overcome under-investment over the years by shifting moneys from capital to revenue. It is part of a long-term plan, the final aim of which is to have a fully privatised health service in terms of delivery and charges.
The Minister has argued that it will be much quicker under the PFI to have hospitals built. According to Douglas Watson, the head of structured finance at the Clydesdale bank, who wrote in the Scottish Business Insider of March 1995,
putting together PFI projects is slow and time consuming and far from speeding things up, some projects may actually have been delayed by putting them out under the PFI.
The myth that the Government peddle does not accord with reality.
Another myth is that the PFI will make projects cheaper. That is not so; costs will merely be deferred over a period of years, leaving others to pick up the tab. It is


known that the cost to a trust of establishing a PFI to build a hospital is probably increased by 3 to 5 per cent. The Edinburgh royal infirmary project is an example. Expenditure will be increased, because of the PFI, by between £4.2 million and £7 million. That extra expenditure would not have been incurred under the normal arrangements. In addition, there is the high return demanded by venture capital of between 8 and 10 per cent. These are the increased costs that are incurred by use of the PFI.
We shall have a system in which we shall allow private finance to obtain substantial profits from the health service. There will be no risk. There will not even be the normal business risk. We shall build in obsolescence within the health service. We shall distort our clinical services, we shall further delay projects and we shall increase costs. What an indictment on the Government. In addition to the bureaucracy that they have enforced on us over the years, they want to charge us more. It is no wonder that I and, I hope, many of my right hon. and hon. Friends think that the PFI is a shambles. It is inherently wrong politically and financially unsound. We should have nothing to do with it.
6.35 pm

Mr. Simon Hughes: Before us is a short Bill and a big subject. No one disagrees fundamentally with the principle that the national health service should not leave others singing for their money. At the same time, no one has subscribed in a democratic way to the principle that we should build capital projects within the NHS in a new way, which effectively means building by the private sector. That is why the Minister has run into a squall and some difficulty.
The Conservative party's manifesto did not refer to capital projects within the NHS being undertaken by the private sector. The Government never stated in a Queen's Speech that they intended to go to the private sector for the building of hospitals. Instead, they have proceeded by stealth. The health service has suddenly discovered, through the Government's actions, little by little, project by project, idea by idea, press release by press release, and guidance of slightly more than a year ago, that it will have to enter into a greater partnership with the private sector, as have other sectors.
The move may be a good idea. There is nothing theologically wrong with the private sector being used to provide buildings or services. However, the case has never been made, and authority has never been given to the Government. My colleagues and I—indeed, Parliament—have never agreed to move from a system whereby the public purse finances NHS buildings and services to one that admits private sector finance. Such a change in system has never come before us as a proposition, and consequently there has never been a majority vote in the House.
The change of system has never been subscribed to even by the Conservative party, let alone on a cross-party basis. We should not change the capital funding of the health service by means of spatchcocked, belated Bills that are put together to close loopholes, without addressing the issues head on.
There is objection because the NHS is less democratic now than at any time since its creation. The Secretary of State is accountable to Parliament, but, as we well

know—Ministers make no bones about it—when he answers detailed questions, he almost always says, "I don't know the answer, so ask the local trust." Alternatively, he will say, "I don't know the answer, so ask the local health authority." He may also say, "The figures are not kept centrally."
Trusts and health authorities are less democratic now than ever before. Members of trusts are appointed entirely by Secretaries of State. They meet in secret and make their decisions in secret. They cannot be part of a democratically elected health service. It is not that they want to be secret. I understand that the official policy of the National Association of Health Authorities and Trusts is that the authorities and trusts are happy to meet in public. It is not they who are blocking the system. Instead, the Government are refusing openness.
The management of the health service would have far more credibility if it were democratic, open and accountable. For as long as hospitals are managed, along with all other parts of the health service, behind closed doors by people appointed by the Secretary of State, who decide what they shall be paid in private, there will not be public confidence.
We are therefore even more dubious—not surprisingly—about going down this road if there cannot be any public participation. None of us pretends that the health service's previous structure was wonderfully, democratically accountable—of course it was not—but at least the majority of health authority meetings were open to the public, at least the health authority took the decisions, not just about commissioning, but about the running of services, and at least some democratically elected people sat on health authorities.
All that is out of the window. Regional health authorities have gone. They have been replaced by civil servants. Therefore, there is an undemocratic and unaccountable health service. That is not sustainable. Whether the Minister's party are again in government in the near future, or whether colleagues in the Labour Front-Bench team are in government, the one thing that both parties must do—the Labour party has not done it nearly adequately enough yet—is to ensure that we have a democratic health service structure, in which the public can choose the people who run the service locally and the public can get rid of them when they do not like them. We must see that happening in the open.

Mr. Harry Cohen: The hon. Gentleman makes a good point. I agree with him about secrecy in the management of the national health service generally, but, specifically on the Bill, there will be secrecy in the relation to the PFI contracts that are entered into, some of which, as my hon. Friend the Member for Rother Valley (Mr. Barron) said, can go on for 70 years and incur NHS and taxpayers' money.
In Committee, the Minister refused to give a commitment that that procedure would be opened out before the contracts were signed, perhaps even with the community health councils being consulted. Does the hon. Member not think that it is appalling that that secrecy in the signing of such contracts could cost the NHS and taxpayers a great deal of money?

Mr. Hughes: I agree with the hon. Gentleman. The public might be concerned about all sorts of issues.
They might, for example, not want a contract to be placed with a particular private sector contractor because of its investment policy, because it does not have ethical investment, or because it supports a drugs company that has an unsatisfactory record—there are all sorts of reasons. The public are carved out of that.
The hon. Gentleman knows as well as I that, in the public service, the more secretive financial contracts are, the more likely it is that bad practice or corruption will take place and all the rest of it. The same contracts are given to friends and to the people who happen to be part of the service, however well one tries to regulate it. I agree with him that that is a real worry.
That links to my third point. Let us not be naive about this. The reason why the Government are going helter-skelter down the road marked "PFI"—any Government might be in this position—is that the Treasury and the Chancellor of the Exchequer are saying, "We must cut and hold down public expenditure, so we must look for other ways of financing public projects."
The public's demand for public projects is going up. They are not saying, "We don't want more health services or public education, " but, "We do want more health services and public education." The Government are therefore asking how they can find the money without raising taxes. Some of us subscribe to the view that a decent taxation level for people who can afford to pay is a prerequisite of a civilised society, as well as a fair and equitable distribution of wealth.
It will not surprise me if the next election is fought on this issue: should people who can afford to do so pay a decent level of taxes, and should people who earn an enormous amount of money pay an enormous amount of taxes? There appears to be a general, growing timorousness among hon. Members in the two largest parties about asking anyone to pay anything for anything. I am worried about that. That does not meet the public mood.
The public do not want Government and public services to waste their money, but they are willing to pay fair taxes if they know that the money is going towards decent public services. They are willing to pay for the health service and education, so long as the money goes on the health service and education.
If, at the next election, the Tory party says, "We are the tax-cutting party"—although no one believes it about that—and if the Labour party says, "No, we're going to be as good at tax-cutting as the Tory party"—I do not think that people will believe that either—I hope that some of us will go on saying, "You can't have decent public services supported only by cutting taxes."
There are short-term political pressures. I understand them and we should acknowledge them, but the foolishness is that, as the Treasury Select Committee makes clear—this is the fourth point—there is no guarantee that one achieves better value for money through the PFI. On the short section on the PFI in health, the Select Committee, to which the Government have not responded, gives warnings that the PFI may not provide the best value for money. First:
The concern is that capital spending in health will be cut on the basis of expected PFI investment that has yet to materialise.

By the Chancellor's own admission, such spending is being cut, and we do not yet have a guarantee that the PFI will materialise. Secondly:
A further criticism of PFI is that in some circumstances it has delayed rather than encouraged investment.
True—that is what we are all being told in our constituencies. Thirdly:
This raises the concern that the ability of the Trust to plan effectively the provision of its services could be lost as decisions will be determined by the method of funding rather than an objective assessment of need.
That is very worrying. It will be a bit like the decision that led to the Jubilee line extension being built: a particular project will be built because it is the one for which the most funding can be secured rather than the one that patients need most.
Fourthly—this point was made by the hon. Members for Rother Valley (Mr. Barron) and for Strathkelvin and Bearsden (Mr. Galbraith)—in the view of the Select Committee and the Department of Health:
clinical services should not be provided under the PFI.
They are as explicit about that as they can be, yet it is clear that clinical services are being provided under the PFI.
Lastly, the consequence is that
PFI was forcing it"—
the trust—
to introduce a false split between 'clinical' and 'non-clinical' services which, hitherto, had been successively provided together, in some cases by the same people.
We know the score: under the PFI, one contracts now, but pays later. The probability is that it will be no cheaper, and it may be more expensive. I will not go to the wall for saying that it will be, but it may be. All I say is that, until the Government—any Government—have the approval of the people and of Parliament to change the basis of the health service's funding, they should not do it.
We understand the logic of this little Bill, but that will be opposed tonight; that is why the Minister had better be careful that his Department does not go down this road so quickly that, throughout the country, it finds itself in a series of muddles, with the public increasingly dissatisfied about contracts that they think should never have been entered into.

Mr. Ronnie Campbell: I have raised before the question of the Cheviot and Wansbeck NHS trust's Ashington hospital in my constituency. The other week, the trust met in secret to decide on phase two of the hospital, phase one of which has been open only about two or three years. The trust has been trying to get phase two off the ground.
Two weeks after it became a trust, it announced that it was £2 million in debt. We have discussed that on the Floor of the House. This time, however, the trust has decided that, to get phase two off the ground, it will put all non-clinical services out to tender. About 40 per cent. of the hospital will be privatised if it goes down that route. It has not made a final decision, but I understand that it is testing the water with tenders from private entrepreneurs.
It makes no difference what the Government say. I remember that, not long ago, they said that the health service was safe in their hands. I do not know what they


meant by that. If they meant that it was safe in their hands because they were going to privatise it, that was fair comment.
There is no doubt that this is a back-door method of privatisation by the Tories, as has been mentioned. 1 cannot understand why they are doing it, because public opinion does not want it. I expected that they would try to make themselves popular before the elections, but they are making themselves unpopular.
My local newspaper, The Journal, mounted a campaign against non-clinical services being privatised, and against the Bill. It was surprising for that newspaper to have a go at a Tory Government. Coming up to a general election, the Government should want to be popular. One opinion poll after another has shown that people do not want the health service to be privatised; but hospitals are being pushed into corners because, as my hon. Friend the Member for Rother Valley has said, their money has been savagely cut by the Government, and they are being forced into privatising non-clinical services—40 per cent. in the case of Wansbeck.
It is a disgrace that people do not have a say about privatisation. It is done by the back door, and it is time the Government stopped it. The Cheviot and Wansbeck trust has not yet decided, but it wants to test the water. I say to it, "Don't. Wait until Labour comes to power, and we will sort you out our way. Don't go down the Tory route. Labour will get phase 2 for Wansbeck."

Ms Hilary Armstrong: I am grateful for this opportunity to take part in the debate. I shall try to take the Minister back to his previous incarnation in the House, when he represented a constituency that was known as Gateshead, West. At that time, he represented the Labour party. I am sure that he may have tried to wipe out all memory of that. Part of the western boundary of that constituency must have edged on to bits of my constituency, which is large.
Shotley Bridge hospital, which I am sure the Minister knew in those days, certainly services the Derwentside part and some of the area on the northern banks of the Tyne. That hospital is now part of North Durham health trust, and the Government approved the building of a new hospital that would eventually link Dryburn hospital and Shotley Bridge hospital. Against my advice, the chosen site for that is Dryburn, and my constituents were promised that, when Shotley Bridge hospital was closed as a district general hospital, other good hospital functions would move to Shotley Bridge.
I do not want to go into my concerns about the process, but local GPs have come up with a good scheme for the development of Shotley Bridge. All this hinges on promises to my constituents about what would happen to the new hospital at Dryburn. It was approved over two years ago, before the Government had thought of the private finance initiative.
My complaint about the Government is that they have demonstrated time and again that they do not know what they are doing with the PFI. The Minister said that it would mean less risk to the public sector. That may be true in terms of the Government's overrunning and over-borrowing, which have led to the PSBR being much higher than anyone ever imagined, but it will not mean less risk for the public or for my constituents and their health care.
They are suffering enormously because of the Government's dithering, indecision and lack of understanding about what they were entering into when they told the trust that it had to go down the PFI route. That has delayed the new hospital at Dryburn, and, what is worse, it is now threatening any development at Shotley Bridge.
Last weekend, because the trust had overspent in the acute areas, it closed five wards in Shotley Bridge hospital. That is totally counter to all the promises it gave to my constituents and me about the way in which the amalgamation of the two hospitals would proceed.
Staff morale is at rock bottom, and constituents are angry, because they never wanted to lose their hospital, as the Minister will know if he remembers his previous incarnation. Instead of going to Shotley Bridge, people from the top of the Tyne valley and Weardale will have to travel about 30 miles to Dryburn. The accident and emergency service was closed before the commitments were given, and that was out of line with earlier commitments.
Far from the public being reassured, the Government's actions are a betrayal of the people of north-west Durham and of Derwentside. The Bill has been presented because the Government have made such a mess. If the PFI was working, the Bill would not be before us. If there was confidence, if people thought that the Government knew what they were doing, there would be no need for it. The Government try to tell us that the Bill will put into law what has always been happening, but the reality is that nobody knows the practice, because the PFI procedure has not been tried before.
The Government do not know the nature of the contracts, because the people who draw them up are not publicly accountable. The Minister said that we have to respect commercial confidentiality. He is asking us to agree that the services and their nature and delivery for the next 25 years will be secret. How on earth can we justify that in the public sector? By all means we should work with the private sector to get money to support the public sector, but when that is done in a way that betrays and breaks the trust between the public and their health service, it will fail dismally.
I beg the Minister to reassess what is going on. My constituents face the worst of all worlds: every promise made to them by the trust and by previous Ministers will have been broken. It is their health service and their hospital. What we have worked out together, and the GPs' plan for a GP-led community hospital, are now in jeopardy because of the overspending of the acute trust and because of anxiety to get the PFI right. The rest of health care and support is likely to disappear, and that will mean that the acute service will not be able to meet the needs of my constituents.
The other half of my constituency is served by Bishop Auckland hospital. As hon. Members will know, we were promised months ago that the PFI in that hospital would be the first to be announced by the Secretary of State. That did not materialise, and I heard worrying rumours this week about the PFI crumbling in Bishop Auckland. That will leave half my constituents with no hospital, and some of them will have to travel nearly 40 miles to get to one. That is a disgrace.
It is about time the Minister shook himself out of his complacency and recognised that, when we debate people and health, we must discuss the public need for health care, and not his Government's incompetent management of the PSBR.

Mr. Clive Betts: The Government have presented the Bill because they feared that they could not get PFI schemes off the ground in the health service, as the banks and other private sector organisations would not enter into liabilities which they were not sure would be picked up by trusts that might not exist in 20—or, indeed, 70—years from now.
The Secretary of State for Health told the Select Committee on the Treasury about a lacuna in the legislation. That was his word, not mine, and I was not sure what "lacuna" meant, until I looked it up in the dictionary. The Secretary of State obviously uses the word frequently to describe his problems.
He said that the problem had been around since the 1940s, and that it was everyone's responsibility. That is not true, because in the past, borrowing for the public funding of projects in the health service has meant that trusts and hospital boards have not had any difficulties. The PFI scheme has raised difficulties because of the different way in which such schemes are entered into compared with borrowing through the old mechanisms.
To underline that point, while we finally got it out of Secretary of State in the Treasury Select Committee that trusts are free to borrow, he went on to say that they are not free to pledge assets. That is why there has not been such a problem in that past. By and large, financial organisations have been willing to lend to trusts only if the loans are backed by the security of the property on which they are lending. That security has always depended on the say-so of the Secretary of State. That is the fundamental difference, and the reason for the Bill. It shows that a control mechanism exists for borrowing through the traditional route that is not there for borrowing through the PFI.
While the Government hope that the obstacle will be removed to allow projects to go ahead, in fact the system presents obstacles all over the place to the setting up and construction of new hospitals and additions to hospitals. Much administrative time is spent on comparisons between PFI and public schemes.
Ask the chief executive of Royal Hallamshire hospital, Sheffield about what happens. He got the go-ahead for its Stone Grove project to replace a rundown mother-and-baby and gynaecological service in 1993. Not only has not a single brick been laid—not even an accountant's pen has been put to a contract for the scheme, because it is still being assessed three years after the original project was given the go-ahead.
If the PFI is cheaper, we must ask why. Again, evidence to the Treasury Select Committee showed that interest charges on private borrowing are 2 to 4 per cent. higher. The Government talk about risk transfer, but if the private sector takes on the risk, it will want the public sector to pay for it. That is right. It will want its risks in the project covered.
The Government will not tackle my worry that any savings from private sector projects will be produced in the same way as they have been with compulsory competitive tendering in local government, where 70 per cent. of savings result from cuts in wages and conditions of the lowest paid workers. That is why cleaning, building maintenance and management and other such activities will be part of the projects. The Government can deny that if they want, but that is the evidence from the Audit Commission on CCT in local government. I fear that the same savings will be made and be called efficiency savings, when they are cuts in pay and conditions.
The Government say that, if private sector funding is cheaper, we should go down that route, but there is a question mark over what would happen if public funding were cheaper. Is the public funding there? Royal Hallamshire hospital has asked me what would happen if its assessment showed that the public sector was cheaper.
There is no guarantee—the hospital thought there was, but it is beginning to change its mind—that there will be public sector funding, because the Government cut £2 billion from the budget estimates for capital infrastructure projects in November last year. A large amount of that £2 billion was taken from the health service. Even if the public sector route was cheaper, the hospital may not be built, because there would be no public funding. It is like a football match where the rules allow only one goal for a side to score in. Only one side could win. The Government have not tackled that.
It comes back to the fact that the Government have retreated from their initial position that the PFI means additional rather than substitutional spending. The game was given away by the Financial Secretary, when, in his final muddled words to the Treasury Select Committee, he said that the money was additional at the time that it was spent. In other words, PFI money is additional to the Government's £2 billion cut. Those are weasel words to disguise what they are doing.
From the delays in bureaucracy, it is clear that there are no controls over the system. It was accepted that there is no control system in the Treasury or Departments. There is only voluntary registration by trusts of schemes into which they have entered. That is not an effective control mechanism for money that has been committed for 70 years—or for most schemes, 20 or 30 years—into the future.
The Minister said in an earlier debate that the PFI would be controlled by the external financing limit, but that is not true. It is true for publicly funded projects, because the capital charges are up front in the first year in which they are committed. They are not in PFI schemes, which involve charging for the provision of a service or the design or construction of a building over the years in which the service is delivered.
Often, when the commitment is made to enter into the contract, there is almost no expenditure in the first two or three years. In the years for which there is an EFL agreed by the House and promoted by the Government, there is no commitment. The commitment is made for years when there is no agreed EFL. It does not act as an effective control and monitoring mechanism. I should like the Minister to reply on that. He made that comment in a previous debate, but the controls are not there. We are committing money for years ahead, without democratic control or accountability.
There is a different sort of control over borrowing, in that organisations are usually prepared to lend only where there is a guarantee against a building. Trusts cannot at present pledge assets against borrowing. That control mechanism may not be very effective, but it is better than anything that exists for the PFI projects that the Government promote.
Sir Christopher Bland, the new chairman of the Private Finance Panel, admitted in evidence to the Treasury Select Committee that there was a built-in incentive to use the PFI route precisely because there are no financial control mechanisms in the first two or three years. There is no disincentive to use that route, because there is no control of over-expenditure in those years.
There are delays and lack of controls, and no additional funding is being provided, but in some ways the most serious problem is the impact on the choice of schemes that will go ahead. Because there is no guarantee of public funding to underpin the schemes, and because of the incentive to use the PFI that I have explained, we are effectively transferring the choice about which hospital projects go ahead from a public process done by democratic representatives to one where the private sector picks and chooses the projects that it wants to fund, design and build.
Some projects will not go ahead, not because of a public choice of priorities but because of a private sector choice. That is a complete handover of political responsibility to the private sector. It is disgraceful that a Government who talk about political sovereignty and role of Parliament should be prepared to hand such power to the private sector.
The privatisation goes further. Ministers must accept that, irrespective of what they say about clinical services not being privatised, that is precisely what is happening. It is happening to Royal Hallamshire hospital in Sheffield, according to its chief executive's evidence to the Treasury Select Committee. I do not know whether the Minister read it, but it frightened me. He said that the distinctions that the Government wanted to draw could not be drawn. Housekeeping teams are composed of people with clinical and non-clinical responsibilities. Management cannot be in the public sector for one and in the private sector for the other. That does not work in a hospital context.
Non-clinical people are being trained to do jobs such as taking blood samples. The trust is trying to enrich people's jobs and pass them more responsibility, under proper clinical training. What should be done with those people? Should we take away those responsibilities—or, when their jobs are privatised, is the totality of their work, including the clinical elements, privatised? Those questions have not been answered.
Further, services at Royal Hallamshire hospital, such as pathology and diagnostic images, are being transferred. Why are hospitals going to the private sector to fund such services? The chief executive's evidence to the Treasury Select Committee was clear. He said that it was because there is no longer any public funding to replace such equipment. He said that there was no choice but to privatise them, because clapped-out equipment could not otherwise be replaced. That is privatisation by the back door of clinical and non-clinical services.
The Bill is designed to remove an obstacle to the financing of PFI schemes but in doing so, it creates crucial problems for the NHS because of fundamental problems

with the PFI. It will create delays in the construction of buildings and the provision of services. There will be a lack of democratic control. The choice of which projects go ahead will be transferred from political representatives to the private sector. The fact that resources are not available from the public sector to underpin those choices means that some projects simply will not go ahead when the private sector does not want to fund them.
That is all for a scheme that is substitutional, not additional. It brings no extra resources into play in providing health services. According to health professionals, regardless of what Ministers say, the scheme is privatisation of clinical services by the back door. Those are major concerns. If the Government allow the process to go ahead without at least imposing proper political and democratic control over it, it will be a complete dereliction of their duty to the country.

Mr. Stephen Timms: I apologise for being absent for much of the opening speeches. I was attending a meeting of the Treasury Committee. Indeed, I want to refer to evidence that it took on the private finance initiative in the health service. The debate on the Bill has revealed very deep confusion about the funding of the health service, not least on the part of Ministers responsible for it.
The Secretary of State gave evidence to the Treasury Committee on 4 March, to which reference has been made. My hon. Friend the Member for Hackney, South and Shoreditch (Mr. Sedgemore) said to the Secretary of State:
Can you tell me, the trusts have the power to borrow, do they not?
The Secretary of State said:
No, that is incorrect.
My hon. Friend then asked:
The trusts do not have the power to borrow?
The Secretary of State replied:
The trusts do not have the power to borrow.
My hon. Friend then read to the Secretary of State the schedule to the National Health Service and Community Care Act 1990, which confers that power on trusts. The Secretary of State said:
I am open to correction
and accepted that trusts did indeed have the power to borrow.
In a later exchange at the same meeting, we talked about the extent to which it would be possible for the Government to control trusts' borrowing, given the fact that, under the Bill, the whole strength of the public sector will stand behind the trusts in their activities. The Secretary of State said:
The trusts' power to borrow will be constrained by their external finance limit in the same way that it is now and it will be constrained for the same reason that it is now, namely in order to control the capacity of the pace at which trusts take on liabilities which the taxpayer stands behind.
He then talked a little more about the external financing limits. I asked him where the power to set those limits was set out in the National Health Service and Community Care Act. He said that he was not sure and that he would send the Committee a memorandum to explain the position.
The external financing limits came up again in the debate on the Bill last week, when the Minister said:
there are the external financing limits, which are agreed at the beginning of the year and monitored…quarterly. If anything is going wrong, it will be spotted quickly by the NHS executive. That is the effective managerial control that is in place, and it is backed by statute."—[Official Report, 24 April 1996; Vol. 276, c. 548.]
Today, I re-read the memorandum that the Department of Health sent to the Treasury Committee in response to the Secretary of State's commitment. It refers to guidance in the NHS trusts finance manual, and says that the trusts have three core financial obligations. First, trusts have
to achieve an annual financial target of a real pre-interest return of six percent on their average relevant net assets".
That is fine. Secondly, it says that trusts have
to break even on an Income and Expenditure basis".
That is also fine. The third core obligation is
to meet, or come within agreed limits of flexibility, the External Financing Limit set by the NHS Executive",
to which the Minister and the Secretary of State have referred.
The memorandum goes on to say of those core obligations—the third being the external financing limit—that
The second of these has statutory force, while the other two do not.
That is the confusion that has arisen in the debate. What exactly is the status of the external financing limit? Is it statutory or not? If, as the memorandum to the Treasury Committee said, it is not, how is the public purse safeguarded when trusts take on the new powers?
The problem is particularly severe because of the way in which the health service has been fragmented in recent years. In my area of east London, there has been a dispute—it has finished in the past few days—between East London and the City health authority and Newham Healthcare NHS trust. Both bodies were established by the Government, and all their members are appointed by the Secretary of State. The dispute was about funding and resulted in my constituents being sent away from Newham general hospital and being told that they could not be given dates for their operations. Given the autonomy of such bodies and the fact that there do not appear to be the necessary statutory controls to monitor their performance, great anxieties arise in the Bill about the risks being taken with the public purse in order to allow those large PFI hospital construction projects to take place.
We can understand the Government's anxiety to get the Bill in place, but the level of risk in what they are doing is very high. They are putting the public purse in jeopardy. I hope that there will be further, long and cool reflection—and indeed amendment—before the Bill passes into law.

Mr. Horam: I commented during the speech made by the hon. Member for Strathkelvin and Bearsden (Mr. Galbraith), who I am glad to see back in the Chamber, that if he thought it sensible not to carry on his career as a medical man when he left the House, he might take up a career in finance. I withdraw those remarks in

the light of what he said later. His failure to understand the simple principles behind the Bill was fairly stupendous. I overrated what he had to say. The Bill simply makes it necessary for the NHS to honour its debts, whereas at the moment, it need not do so.

Ms Armstrong: rose—

Mr. Horam: I shall not give way to the hon. Lady because I am replying to the hon. Member for Strathkelvin and Bearsden.
The hon. Member for Southwark and Bermondsey (Mr. Hughes) said, in a rather interesting speech, that the Bill was not theologically wrong and might be a good idea. I am glad to have that rather qualified support. He also said that there was not much accountability in it, but he forgot the role of community health councils, which are important. [Interruption.] They are important. When any major change takes place in local health provision, it has to be referred to the CHC, and, indeed, other representative bodies. The hon. Gentleman cannot therefore ignore all that.

Mr. Simon Hughes: rose—

Mr. Horam: I have given way to the hon. Gentleman about five times. What I have said should he taken into account when one considers consultation and accountability.
The hon. Members for Blyth Valley (Mr. Campbell) and for North-West Durham (Ms Armstrong) made very understandable points about their local hospitals, which I shall read when I look at Hansard. In many ways, they were very fair points. They were both in essence saying that they wanted schemes to go ahead—there was no doubt about that—but with public sector cash. The hon. Member for Blyth Valley said precisely that. He hoped that there would be a Labour Government and that schemes would then go ahead with public sector cash.
The hon. Member for Sheffield, Attercliffe (Mr. Betts) will be surprised to know that, in some technical respects, he was actually quite correct, and I agree with him. [Interruption.] They were technical points. I am glad that he agreed with me on the fundamental point about savings being available through things such as compulsory competitive tendering and market testing in the health service. He may well know, since he is a student of those matters, that we have saved more than £1 billion through market testing in the NHS since we introduced it. In objecting to that process, the hon. Gentleman must realise that that gap would have to be filled by public sector cash.
The hon. Member for Rother Valley (Mr. Barron) made the point in his initial speech—at some length—that, in the final analysis, this is about the financing of hospitals and hospital improvements. The Government are bringing in private sector cash not only to build new hospitals, but to deliver better value for money. Labour certainly admits that it wants more hospitals, but if it does not use private sector cash to provide them, its only recourse is to use more public sector cash. That is the fundamental point that Labour must face, but it never faces up to it—it is a tax-and-spend party.
Labour's only alternative to the way in which we are providing funds via the private sector is to bring in public sector funding. It must increase public sector expenditure


even more and raise taxes to fund that increase, or it will Licensing (Amendment) (Scotland) Bill not be able to build hospitals. That is the fact of the matter. Labour is fundamentally ashamed of its past, and silent about this matter. Its opposition to the Bill is considered. wholly bogus.

Question put and agreed to.

Bill accordingly read the Third time, and passed.

Orders of the Day — Licensing (Amendment) (Scotland) Bill

As Amended (in the Special Standing Committee), considered.

Clause 1

LICENSING CONDITIONS FOR CERTAIN EVENTS

The Minister of State, Scottish Office (Lord James Douglas-Hamilton): I beg to move amendment No. 9, in page 1, line 7, leave out 'section' and insert 'sections'.

Madam Speaker: With this, it will be convenient to discuss the following: Government amendment No. 15, in line 38, at end insert—

'Conditions for existing licences

18B.—(1) This section applies to premises in respect of which a licence has been granted, whether before or after the coming into force of this section, under section 17 of this Act where no conditions have been attached to the licence in pursuance of section 18A of this Act.

(2) Where it appears to a licensing board that an event to which section 18A of this Act applies may be held on premises to which this section applies, the board shall convene a meeting for the purpose of attaching to the licence the conditions specified in subsection (1) of that section.

(3) The clerk to the licensing board shall, not later than 21 days before the date of the meeting to be held under subsection (2) above, serve on the holder of the licence and send to the chief constable a notice of—

(a) the meeting;
(b) where the Secretary of State has prescribed the terms of any prescribed conditions, such terms;
(c) in the case of any other prescribed conditions, the terms proposed by the board; and
(d) where the board proposes to attach any other conditions to the licence, the terms of such conditions.

(4) At the meeting held under subsection (2) above, unless the holder of the licence satisfies the board that no event to which section 18A of this Act applies will be held on the premises, the board shall attach to the licence the prescribed conditions and such other conditions as it considers necessary in the terms determined in accordance with subsection (5) below.

(5) In determining—

(a) whether the board is satisfied as mentioned in subsection (4) above; or
(b) what conditions (other than prescribed conditions) to attach to a licence or the terms (other than such terms as are prescribed) of such conditions,

the board shall have regard to any observations submitted by the chief constable and any other person or body mentioned in section 16(1) of this Act.

(6) Subsections (2) to (4) of section 16 of this Act shall apply in relation to any observations made under subsection (5) above as they apply in relation to any objection made under that section; and for the purposes of such application any reference in the said subsections (2) to (4)—

(a) to an application shall be construed as a reference to conditions proposed to be attached to the licence;
(b) to the applicant shall be construed as a reference to the holder of the licence;
(c) to an objection shall be construed as a reference to an observation;


(d) to the proper address of the applicant shall be construed as a reference to the address at which notice is served on the holder of the licence under subsection (3) above,
and cognate expressions shall be construed accordingly.

(7) The terms of conditions to be attached to the licence in pursuance of subsection (4) above are—

(a) in the case of the prescribed conditions—

(i) where the terms of any condition have been prescribed, such terms;
(ii) where the description of any condition has been prescribed, such terms as the board considers appropriate;
(b) in the case of any other condition notified under subsection (3)(d) above, such terms as the board consider appropriate; and
(c) in the case of any condition not so notified, such terms as are agreed with the holder of the licence.

(8) Subsections (4) to (9) of section 18A of this Act shall apply to conditions attached to a licence under subsection (4) above as they apply to conditions attached to a licence under section 18A(I) of this Act.

(9) The clerk to the licensing board shall forthwith intimate to the holder of the licence—

(a) where the board is satisfied that no event to which section I 8A of this Act will be held on the premises, that fact; and
(b) where the board attaches conditions to the licence, such conditions by sending to the holder of the licence a copy of the licence with the conditions attached.

(10) In this section "prescribed conditions" has the same meaning as in section 18A of this Act.'.

Amendment (a) to the Government amendment, in subsection (4), after the first 'licence', insert 'or his representative'.

Amendment (b), in subsection (9), leave out 'forthwith' and insert
', no later than fourteen days after the meeting held under subsection (2) above, '.

Government amendments Nos. 11 and 12.

Lord James Douglas-Hamilton: I welcome the all-party support for this Bill and the helpful suggestions made by Opposition Members, many of which are incorporated in the Bill. We wish to consider amendment (a) to Government amendment No. 15 further, because it may give rise to consequential amendments to other legislation. I therefore wish to take away that amendment with a view to considering whether it can be accepted without causing difficulty to other legislation. We are very sympathetic to the aims of the amendment, and we shall do our best to achieve a satisfactory outcome.
Hon. Members who were present will recall that I said in Committee that I intended to bring forward an amendment on Report that would give licensing boards the power to attach conditions to existing licences in the same way as the boards would be able to attach conditions on the grant or renewal of a licence. Licences granted under the Licensing (Scotland) Act 1976 usually last for three years, and it would in no small degree frustrate the object of the Bill if boards had to wait that long before being able to attach conditions to relevant licences, to protect the health and safety of young people.
Amendment No. 15, along with three consequential amendments, will make certain that licensing boards do not have to await the renewal of licences before attaching

conditions. The amendment introduces new section 18B into the 1976 Act, which enables a board to attach conditions to an existing licence. Where a board proposes to attach conditions to an existing licence, it must convene a meeting and serve a notice on the licence holder.
We have taken account of the essence of concerns raised by hon. Members about the wording of the earlier version of the amendment. It was suggested that the licensing board might not provide enough information to the licence holder about when and where the meeting was to be held. New section 18B(3)(a) has been drafted in terms already used in the 1976 Act which, I hope, will assuage any concerns that hon. Members may have had about the information to be notified to the licence holder. The holder of a licence has the same rights of appeal to a sheriff in respect of conditions attached to an existing licence as are provided in relation to conditions attached on the grant or renewal of a licence.
I hope that hon. Members will appreciate the good sense of amendment No. 15, and the consequential amendments Nos. 9, 11 and 12, noting that we have taken on board their point mentioned in Committee about the notification of the meeting. I therefore commend them to the House.
While it may not be appropriate for me to refer to Opposition amendments other than the one that I have agreed to take away and consider, I might assist the hon. Member for Dumbarton (Mr. McFall) by saying that, although I am sympathetic to the aim of amendment (b), we would seek to cover that matter in guidance. It is not necessary to legislate. I hope that that assists the hon. Gentleman.

Mr. John McFall: First, I thank the Minister for his co-operation during the evidence sessions on the Bill. It has been a co-operative and a listening exercise, and the Bill has gained from that. The Minister and the Government made considerable concessions after hearing the evidence. I accept that Government amendments Nos. 9, 11 and 12 are consequential, and that Government amendment No. 9 in particular is a paving amendment for amendments (a) and (b).
The reasoning behind the amendments is as follows. A meeting of the licensing board, as defined in new section 18A, will be held for the purpose of putting conditions on the licence. The licensing board will be required to give notification of those conditions and of the meeting date and location. Our amendments cover that, and make more specific the date and location of the meeting.
The amendments further provide for the licence holder or his representative, as laid out in the 1976 Act, to make representations, and deal with the word "forthwith". The Bill contains no qualification of "forthwith", and I was trying to make it more specific by referring to 14 days. But even at this late stage, I am happy for the Minister to take the amendments away and see what can be done.

Lord James Douglas-Hamilton: On amendment (b), I confirm that the word "forthwith" means as quickly as possible. We shall seek to confirm in guidance that "forthwith" means what it says, and that it should be well within 14 days. We accept the spirit of the hon. Gentleman's comments.

Mr. James Wallace: New section 18B(2), in amendment No. 15, states:


Where it appears to a licensing board that an event to which section 18A of this Act applies".
The licensing boards are bodies. How does the Minister envisage something appearing to them? Does he envisage a procedure to enable people to make objections to the board or to draw matters to its attention? How will the board come by the knowledge to set this worthwhile procedure in train?

Lord James Douglas-Hamilton: The requirement is that the decision of the licensing board must be intimated to the licence holder forthwith. The hon. Gentleman is raising a different point, which I think we shall come to in discussing another amendment. I might return to the matter then.

Amendment agreed to.

Mr. McFall: I beg to move amendment No. 13, in page 1, line 10, leave out 'or'.

Mr. Deputy Speaker (Sir Geoffrey Lofthouse): With this, it will be convenient to discuss amendment No. 14, in page 1, line 12, at end insert
; or

(d) a regular or occasional extension under section 64 of this Act.'.

Mr. McFall: Amendment No. 13 is a paving amendment for amendment No. 14, the effect of which would be to ensure that the provisions of new section 18A of the Licensing (Scotland) Act 1976 applied to all licence extensions. The reason for it is that the provisions of new section 18A apply currently to licences, occasional licences and occasional permissions under the 1976 Act. Regular extensions and occasional extensions are omitted, and there seems no logical reason for that.
Accordingly, the amendment remedies that, because we could find a licensing board giving an occasional extension to premises for a 21st birthday party, and the premises getting that extension for up to one month. There is flexibility in the amendment, and I hope that the Minister will consider it seriously.

Lord James Douglas-Hamilton: With respect, I do not think that the amendments are strictly necessary and indeed, if introduced, they might cause confusion for the licensing boards, because they would create inconsistency between the new arrangements and existing procedures covered in the 1976 Act. I welcome the opportunity to explain the position.
The types of licence or permission to which the provisions of clause 1 will apply are listed in the new subsection. As the hon. Gentleman mentioned, the purpose of the amendments is to add regular or occasional extensions granted under the provisions in the 1976 Act, which enable alcohol to be sold outwith the statutory core hours, to the list in new subsection (1). That implies that conditions attached to the licence fly off during any occasional or regular extension of permitted hours granted in relation to the licence. I am glad to confirm that that is not the case. A licence holder would be required to observe the conditions attached to his licence, not only during the normal permitted hours, but where he or she has authority to extend the sale of alcohol beyond the normal permitted hours during such extensions.
In view of that explanation, I hope that the hon. Member for Dumbarton (Mr. McFall) can agree that the matter is amply provided for and will withdraw the amendment.

Mr. Menzies Campbell: The Minister seems properly to have stated the position. The foundation for any regular or occasional extension under section 64 of the 1976 Act arises only once a licence has been granted under section 17. Therefore, if a condition attaches to the original grant of licence, it inevitably follows that the condition must attach to any regular or occasional extension of that licence. Therefore, on this occasion, perhaps much to the Minister's surprise, I find myself in agreement with him. His analysis of the effect of the amendment is entirely correct and I join him in suggesting to the hon. Member for Dumbarton (Mr. McFall) that it be withdrawn.

Mr. McFall: The forces of the law are closing in on me. I take the advice that has been given to heart and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord James Douglas-Hamilton: I beg to move amendment No. 1, in page 1, line 16, leave out 'conditions' and insert
'the prescribed conditions and such other conditions as the board considers necessary'.

Mr. Deputy Speaker: With this, it will be convenient to discuss the following amendments: No. 20, in page 1, line 19, after 'attach', insert
'the prescribed conditions and such other necessary'.
Government amendment No. 2, in page 2, line 4, at end insert
'(3A) The Secretary of State may, by order, prescribe the conditions which are to be attached to a licence or permission under this section, and an order made under this subsection may prescribe—

(a) the terms of any such condition; or
(b) the description of any such condition, the terms of which shall be specified by the licensing board, and such an order shall be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.'.

Amendment (a) to the Government amendment, in subsection (3A), after 'Secretary of State' leave out 'may' and insert 'shall'.
Amendment (b), in subsection (3A), after 'subsection' leave out 'may' and insert 'shall'.
Government amendmento. 3.
Amendment No. 23, in page 2, line 13, at end insert—
'(4A) The conditions referred to in subsection (3A) above shall without prejudice to any other provisions which the Secretary of State may consider necessary include the following—

(a) the number of persons who may attend the event;
(b) the number of stewards who shall attend the event;
(c) the training and qualifications of the stewards who shall attend the event;
(d) the number, training and qualifications of medically qualified persons who shall attend the event;


(e) that the premises should have a soundproofed, ventilated area not used for dancing; or
(f) that the licence holder should provide without charge fresh drinking water to those attending the event.'.

Government amendment No. 5.
Amendment No. 27, in page 2, line 31, after 'music', insert
medically qualified person" includes any person qualified as a doctor, nurse or paramedic;'.
Government amendments Nos. 7 and 8.

Lord James Douglas-Hamilton: This group of Government amendments deal with the proposed introduction of a power to enable the Secretary of State to prescribe conditions which licensing boards must attach to licences in relation to premises at which relevant events are to be held. The amendments fulfil undertakings that we gave in Committee to bring forward on Report the changes required to provide for this.
The amendments address concerns raised in debate that boards might not implement the provisions in the Bill with the same consistency or rigour. We are of course committed to issuing guidance on the nature and form of conditions that may be attached to licences.
We cannot guarantee that that guidance will be followed consistently by each board. As hon. Members who were present recognised when we debated this issue in Committee, the health and safety of the young and vulnerable are important enough to require certain minimum standards to be applied across the country as a whole. We therefore agreed that the Secretary of State should have available a power which he can exercise, if required, to prescribe minimum conditions which boards must attach to relevant licences. That will ensure that the basic policy underlying clause 1, which has received support from all sides, will not be undermined through inconsistency of approach.
Amendment No. 2 introduces the necessary order-making power and amendment No. 1 imposes the duty on boards to adhere to the terms of any order made by the Secretary of State under it.
As the intention of the amendments is to ensure that there is, if necessary, a core of minimum conditions to protect young people attending relevant events, amendment No. 5 provides that the attachment of the Secretary of State's prescribed conditions to a licence may not be appealed by the licence holder. However, the terms of the conditions imposed by the board, where the Secretary of State has simply described the type of condition which must be applied, will be subject to an appeal to the sheriff in the same way as any other condition imposed at the board's discretion.
Amendment No. 8 ensures that "prescribed conditions" are defined for the purposes of the Bill. The other amendments, Nos. 3 and 7, are consequential drafting amendments.
I hope that hon Members will welcome the amendments which introduce a mechanism, arising out of representations in Committee, whereby minimum conditions can, if it proves necessary, be set for the whole of Scotland.
I commend the amendments to the House.

Mr. McFall: I thank the Minister for that explanation. I accept his arguments on Government amendments Nos. 7 and 8.
With regard to Government amendment No. 5, the Minister said that the right of appeal to the sheriff cannot apply when the Secretary of State has made his decision. That is why consultation on the Secretary of State's conditions is paramount. The Bill removes the right of appeal on the Secretary of State's conditions. We need the agreement of all parties regarding the tenor of those prescribed conditions. I seek the Minister's further comment on that.
The Opposition's amendment No. 20 takes into account the effect of the Government's amendments. Amendment No. 20 corrects a Government error. The Bill currently refers to:
The duty of the licensing board under subsection (1) 
with regard to the conditions of a licence. The Government's amendment of that in their amendment No. 2 should contain a reference to the prescribed conditions in new subsection 18A(2).
Perhaps the most important Opposition amendment in the group is amendment No. 23, which states that the Secretary of State shall prescribe conditions. We remember back to the Civic Government (Scotland) Act 1982 when local authorities were allowed the power to prescribe byelaws. If I am correct, only 44 out of 57 local authorities undertook that. Therefore, it is important that there is an obligation on local authorities to have the conditions. The Minister kindly sent me a copy of the model licence conditions which have gone out to local authorities, but I still feel that there must be an obligatory element.
The Government are not laying down in concrete exactly what will apply in each and every area. They should be setting the outcomes so that there is a consistency of approach throughout Scotland and throughout different local authorities. On Second Reading, a number of right hon. and hon. Members said that such lack of consistency in the original Bill was a matter for concern. I should like the Minister to consider that issue closely.
Amendment No. 23 suggests that the Secretary of State may consider it necessary to include
the number of persons who may attend the event".
Under the Civic Government (Scotland) Act 1982 a number of authorities prescribed conditions at dances and, as we had, raves. I should like to see that adopted throughout Scotland. I think that the authorities were Stirling, in the Secretary of State's constituency, and West Lothian. The number of persons who may attend an event is extremely important. When we look back to the Hangar 13 incident, we find from police statements that the number of young people at the event exceeded the desirable number.
There is also the issue of stewarding. We have had representations from a number of local authorities—for example, in Glasgow—for stewards to be properly qualified. The training and qualifications of stewards who attend such events is extremely important. We have quite a distance to go yet to ensure that we have that standardisation of approach to training and qualifications.
The Opposition have also sought to define a medically qualified person. The Government have attempted that in another area, but it is important specifically to determine a medically qualified person and the number of such people who should be at these events. If individuals or organisations put on the events, they have certain obligations, and it is important to have in the Bill exactly what those obligations are.
I do not think that there is any disagreement, other than perhaps from the Glasgow licensing board, that the holder of the event should provide, without charge, fresh drinking water for those attending the event. That is a commonsense approach to a contemporary situation in which society finds itself. The Opposition have always gone along with the Government on that issue. However, we would like it to be more specific and to be obligatory.
Although the model guidelines issued by the Scottish Office are comprehensive in their approach, without that obligatory element, there could be variation between areas which would defeat the purpose of the Bill for which there has been almost unanimous approval. Will the Minister consider that?

Mr. Phil Gallie: I thank my hon. Friend the Minister for the way in which he has responded to some of the points made in Committee. I fully endorse the amendments and welcome the fact that he sent to us his suggestions for model licensing conditions. In Committee we used the word "flexibility" a great deal with respect to applications in different parts of the country. The amendments allow for that flexibility.
Having said that, there are one or two words in the model licensing guidelines to which I take great exception. It is unfortunate that the phrase "chill-out areas" has been used, because it is associated with the world of drugs. As we said in Committee, the licensing conditions apply to venues that could be, and hopefully are, drug-free, but there is still a need for quiet areas and cool areas. Perhaps my hon. Friend the Minister will consider that when he puts together the final draft of the guidelines.

Mrs. Irene Adams: Like the hon. Member for Ayr (Mr. Gallie) I believe that the Minister has incorporated into the guidelines most of the things that we asked for in Committee. I am a little concerned that there are a few loose ends that need to be tied up. There must be some obligation to ensure that the conditions are laid down stringently.
I am concerned particularly about stewarding and the lack of a definition of what constitutes a steward. What sort of person will be employed as a steward? Will it be someone whom the licence holder will draft in for the night or will it be someone who is permanently employed? There does not seem to be any need for accreditation. Training is referred to in the model guidelines, but it is very loose in-house training. I would have preferred to see the stewards checked out and accredited by the police. All too often in the past, some of those doing the stewarding seem to be bigger thugs than those whom they were trying to escort from the premises.
We would not get into a taxi if the driver did not have a licence to carry passengers, but we often put our young people into the hands of stewards who have no expertise and who are just drafted in and paid by the night. We owe it to the young people attending these raves to ensure that the stewards are properly qualified.
We also have to apply that principle to whoever is in charge of providing medical attention. Again, we need to lay down more stringent guidelines. I know that some of the licence holders who came to see us talked about getting in paramedics on a regular basis, but we must tighten that up a little bit.

Mr. Sam Galbraith: I should like to reiterate the points made by my hon. Friend the Member for Paisley, North (Mrs. Adams) about stewarding and the need to set guidelines. I know that there are some proposals from the CU Jimmy university to offer a degree in bouncing which may be helpful. I believe that one can obtain a degree in most things there. [Interruption.] Caledonian university is known in Tom Shiel's diary as the CU Jimmy university. I think—[Interruption] The hon. and learned Member for Fife, North-East (Mr. Campbell) just accused me of academic snobbery. That is a shocking accusation since we went to the same university.
We cannot leave this completely unregulated. This is an important method by which we will regulate what goes on. As my hon. Friend the Member for Paisley, North said, we would not let anyone drive a taxi without some form of licence and we stipulate various regulations for the person offering medical attention. Yet, for the bouncer, there is nothing to be done. The Minister should take that away and look at it.
7.45 pm
Having said that, I welcome the amendment and what it is trying to do. I understand that part of the reason for it is the position taken by the Glasgow licensing board, which said that it would not lay down stipulations, for various reasons. That is wrong. The licensing authorities are not there as our moral guardians—that is a position for us to adopt—but they are there to regulate public order. They must not let their personal views interfere with the conditions necessary for good public order.
It is important to try to maintain some rational debate. I will take this opportunity to support the director of social work in Glasgow, Mary Hartnell, who tried to lay out the facts. We might not agree with some of the conclusions, but we should not dispute the facts. I do not blame those who condemned her because I know what it is like. Representatives from the press phone up and say, "So and so has said this." One gives a short, outraged, how can it possibly be, end-of-the-world-is-nigh response, only to find out that the person did not say anything in the first place.
It is important that there is uniformity across the country. We cannot have conditions in one area which mean that the problems shift elsewhere. In that respect, public opinion and other pressures might, of necessity, force licensing bodies to adopt some sort of uniformity because, if an area is lax, the raves will simply move in. The days of variation in regulations are over.
I remember when Glasgow and other councils had the right to ban certain films. It is preposterous that they should have been allowed to make such moral judgments. I remember that Glasgow banned a couple of films and we trooped down to the constituency of my hon. Friend the Member for Paisley, North to watch them. That was great business for Paisley, but we cannot have that.
I hope that the Minister will take on board the amendment tabled by my hon. Friend the Member for Dumbarton (Mr. McFall), which ensures that there is an obligatory aspect.
There should not be too much variation; absolute conditions should be laid down and rigorously enforced. In particular, I refer to the availability of drinking water and to the cups for drinking it. I can envisage a situation where a rave party takes place in a hangar, hundreds of people attend and the plastic cups run out—I suspect that they may be used for other things. These conditions have to be rigorously enforced. That brings me back to the licensing of stewards. If the conditions are not enforced, the stewards may have their licences withdrawn. With those caveats, I welcome the amendment.

Mr. Ian Davidson: I support the amendment of the hon. Member for Dumbarton (Mr. McFall), particularly with reference to changing "may" to "shall". The House must clearly show that it wants to introduce the model licensing conditions that the Minister has circulated. I am particularly interested in chill-out areas, notwithstanding the argument of the hon. Member for Ayr (Mr. Gallie) with whom I agree on this point. I am also interested in the availability of drinking water.
I believe that there will be a financial temptation for people who run these social events to let the water run out and to have no cups available. Young people will then be obliged to buy drinks at exorbitant prices. Quite often, they have only a limited amount of money and they will choose to do without. For medical reasons, it is essential that they continue to take in fluids in considerable quantities.
Clearly question of public safety will operate in direct contradiction to the financial interests of the operators of the centres. In those circumstances, the local authority—which will come under great pressure from the licence holders—should not have the discretion to waive the facilities that we believe should be provided. Therefore, a "shall" rather than a "may" would be a much clearer way of stating the opinion of the House in this matter.

Mr. Menzies Campbell: As I understand the purpose of the amendments moved by the Minister, they are to ensure that a common set of standards apply to events that are held in Scotland and covered by the Bill. With the creation of that common set of standards, the Secretary of State will have the discretion to lay down the standards. It leaves a substantial amount of discretion to the Secretary of State, and I do not normally encourage that, because I think discretion can be abused as easily as it can be properly implemented.
Against that, the amendment of the hon. Member for Dumbarton (Mr. McFall) would prescribe certain provisions that the Secretary of State has to incorporate willy-nilly in the guidance that he issues. I am not persuaded that that is the appropriate way to proceed. I believe that leaving this matter to the common sense of the Secretary of State is a much more effective way to realise some of the objectives that hon. Members are anxious to achieve.
I understand the enthusiasm for prescribing the number of persons, the number of stewards and their training and qualifications, the number of medically qualified persons

the soundproof ventilated area not used for dancing—a soundproof ventilated area in the Chamber might be of some assistance to us from time to time—and the fresh drinking water. The latter issue came up when the Bill had its Second Reading in the Scottish Grand Committee. Some hon. Members expressed doubt as to whether a provision of that kind could be introduced by a Bill dealing with safety. We had an interesting debate as to whether health and safety was necessary in order to provide a proper statutory foundation.
All those are highly desirable objectives, and I understand the motives of the hon. Members who wish to have them on the face of the Bill. However, I am not convinced that it is necessary in this case. There is a strong argument for leaving this to the discretion of the Secretary of State. For the second consecutive occasion, I find myself agreeing with the Minister. For the moment, I am not convinced that amendment No. 23 is necessary to bring about the entirely laudable objectives that hon. Members who spoke in support of it clearly wish to achieve.

Lord James Douglas-Hamilton: I agree with the hon. Member for Dumbarton (Mr. McFall) that there should be consultation before any order is made. It is important for us to have a consistent policy that is applied throughout Scotland.
My hon. Friend the Member for Ayr (Mr. Gallie) raised the issue of the model licensing conditions and mentioned certain drafting improvements that can be made. We shall look at the improvements, as the guidelines have not been finally approved.
We shall look at the guidelines in relation to what the hon. Member for Paisley, North (Mrs. Adams) said and revise them as appropriate. At this stage, the guidelines merely give an idea of the conditions that may apply—they will not be finalised until we have consulted widely.
The hon. Members for Paisley, North and for Dumbarton raised the issue of stewards and training. The power that licensing boards will be given to set conditions can well accommodate a requirement for adequately trained door stewards. Indeed, we would expect the boards to consider such a condition as one of the minimum requirements, and it will be highlighted as such in the model conditions. A new Scottish vocational qualification in door supervision will soon be available. This has been prepared in partnership with the security industry training organisations. Such training initiatives should have a positive effect in improving the standards and the public image of door stewards.
I am grateful to hon. Members for their comments about the conditions being obligatory. We should try to get the provisions right, and I believe that we have done so. We were concerned—Opposition Members shared our concern—that some licensing boards might not apply the requirement to impose the conditions properly. Therefore, we felt it necessary to put down the Government amendments as a precautionary step. At present, we have reason to believe that licensing boards will act responsibly and implement the policy fully. That is surely the correct basis on which to proceed.
We shall monitor practices closely, and if that does not happen, the Secretary of State can step in. We should not pre-empt the decision making of local licensing boards at this stage, as it would be undesirable to undermine their


responsibility. However, if difficulties arise, we shall be in a position to do something about it. In view of the strength of feeling expressed, I am willing to reconsider our attitude on this subject.
I shall give an example of why we have dealt with the matter in that way. I refer to the issue of numbers. We believe that a certain amount of local discretion is appropriate in determining the numbers. It is difficult for the Secretary of State to prescribe an obligation on numbers. We shall review the matter closely in the light of what happens and take further action if necessary. At the moment, we believe that the other amendments are not necessary. The Government amendments are necessary to give the Secretary of State the necessary powers. I am grateful for the support of the hon. and learned Member for Fife, North-East (Mr. Campbell).

Mr. McFall: It was worth waiting to hear about the Government's initiatives in higher education—a certificate in door supervision. I look forward to the Minister presenting the certificates. I refer to the empirical evidence. The City of Glasgow Licensing Board recently wrote to me in relation to training staff and stewards. The letter stated:
Glasgow Licensing Board considers that it has been at the forefront of promoting the responsible management of licensed entertainment premises by licenceholders within its jurisdiction.
The board's experience has led it to the conclusion that the training of staff and stewards employed in licensed premises is an extremely important factor in providing a well-run and trouble-free environment. The board has already introduced its own initiatives in regard to training. More recently, in a well-publicised move, it introduced a five-point plan intended to eradicate drugs in licensed entertainment venues.
The board states:
To a large extent…these initiatives are supported by the licensed trade",
but concludes that
the licensing of stewards employed in licensed premises is an issue which the Scottish Office should take on board. However, to date the Scottish Office have resisted the Board's repeated requests in that regard.
I hope that the Minister will pay attention to evidence from a licensing board that has had daily experience of the present circumstances.
8 pm
The hon. Member for Ayr (Mr. Gallie) and my hon. Friend the Member for Paisley, North (Mrs. Adams) mentioned chill-out areas. The Glasgow licensing board has said that it has spoken to the Scottish Drugs Forum about the issue, and that the forum considers the term unfortunate. The concept of a quiet lounge area outwith the discotheque environment, already in place in many establishments, is apparently what was intended by the reference. The Scottish Drugs Forum seems to be content to withdraw the term "chill-out area". I ask the Minister to consider the issues involved.
We speak of model licensing conditions. We do not want a missive to be sent from St Andrew's house saying exactly how many individuals should be allowed into a venue at any one time; that can be prescribed locally. The people concerned should be obliged to take the necessary action, however. The filling in can be done at local

level—discretion can be given for that—but the Scottish Office should issue an order for that to be done. That would provide some consistency.

Lord James Douglas-Hamilton: I shall be happy to examine the matters that the hon. Gentleman has raised.

Mr. McFall: I beg to ask leave to withdraw the amendment.

Mr. Deputy Speaker: Unfortunately, it is a Government amendment.

Amendment agreed to.

Mr. McFall: I beg to move amendment No. 17, in page 1, line 16, after 'of', insert '(i)'.

Mr. Deputy Speaker: With this, it will be convenient to discuss also the following amendments: No. 18, in page 1, line 17, after 'health', insert ', welfare'.
No. 19, in page 1, line 17, after 'event', insert
';and

(ii) promoting knowledge among such persons about the effects of the misuse of alcohol and drugs.'.

Mr. McFall: Amendment No. 17 is consequential: it is a paving amendment for amendments Nos. 18 and 19. We consider that the conditions that the licensing board is obliged to provide under new section 18A should safeguard the health and safety of those attending raves; but health and safety are not the only matters with which the board should be concerned: it should also be concerned about the welfare of individuals. That might not include all types of provision that a licensing board can make, however. The welfare category could include the hours during which such an event takes place, the physical environment and, perhaps, the volume of the music.
Amendment No. 19 imposes a new obligation on licensing boards to promote knowledge of the effects of misuse of alcohol and drugs. The duty on licensing boards in respect of promoting the health and safety of those attending raves needs to be tempered by information that allows people to make informed decisions about their health. The Minister will note that we have included alcohol as well as drugs in the amendment. We think it important to educate people about that. We welcomed the all-party approach to drugs adopted by the Government and the Opposition parties in Scotland, but people must be educated at local level. Licence holders organising such events should be obliged to disseminate information about the misuse of alcohol and drugs.
As the Minister knows, many young people are abusing alcohol to an unacceptable extent. Some brewers and other companies have produced "alcopop", which I believe is aimed specifically at very young people. A local educational programme should be provided to counter that. Yes, we are placing an obligation on licence holders, but they are dealing with young people who may be vulnerable, and it is important for them to have obligations.

Mr. Galbraith: I support amendment No. 19 in particular: I am in favour of the concept of continuing education. I do not intend at this stage to deal with the


question of how to prevent people from taking drugs, which is wide and difficult, but I am encouraged by the fact that the amendment refers to alcohol as well as drugs. There is some equivalence between the two.
We often forget that alcohol is a drug, in the sense that many other substances are drugs. We should not seek to distinguish the different kinds of drug for historical or social reasons. I am only disappointed that the amendment does not include tobacco. People who find that they have to smoke are addicted to nicotine: they are nicotine drug addicts, and in that sense they are no different from any other addict, although it is socially less acceptable to admit. Those who indulge in tobacco do not want to admit that they are physically dependent.
When we consider the number of people who die as a result of drug taking, we tend to go by the generic terms. We think of heroin and cocaine, for instance. In 1994, 247 people in Scotland died as a result of using drugs defined in that way. More people—335—c1ied of illnesses directly related to the ingestion of the drug alcohol, while 3,000 died from diseases associated with alcohol.
In 1991, 10,600 people died as a result of using the drug nicotine, obtained through nicotine. Let us keep the figures in proportion. A total of 247 people died as a result of what are commonly and popularly known as drugs; 10,600 people died as a result of the drug nicotine. That does not excuse the use of any of the other drugs, but it does mean that we should see the matter in perspective.
I welcome the amendment, and hope that the Minister will take it on board. If he does, I hope that, by whatever method, he will include nicotine in its provisions.

Mr. Wallace: I share the sentiments and good intentions behind the amendments, but I am afraid that I cannot support them, because I do not honestly think that they are capable of being translated into action by licensing boards. Although matters such as health and safety may be susceptible of an objective approach when a licensing board attaches conditions, to impose responsibility regarding welfare is to impose a duty that is so wide that I am not sure how the board could, in all conscience, discharge it. Welfare may differ considerably from one person to another, and, given such large crowds, it would be very difficult to discharge such a responsibility.
Amendment No.19 speaks of
promoting knowledge among such persons about the effects of the misuse of alcohol and drugs.
Again, we do not object to that idea—much more should be done generally to promote knowledge of those effect—but how is a licensing board to discharge that responsibility? What will be required? Must adverts be placed or must there be a period during the evening when a lecture is given or do leaflets have to be distributed? If leaflets have to be distributed, I think that all hon. Members would agree that how one promotes information and explains the effects of such actions can often be a matter of debate and dispute.
During our debate on an earlier group of amendments, the hon. Member for Strathkelvin and Bearsden (Mr. Galbraith) mentioned the furore sparked off by the remarks of the director of social work in Glasgow. I shall not go into the merits of what was said, but the incident

illustrated the number of differing views that can be held on the subject. A person who is granted a licence may distribute leaflets seeking to promote knowledge, but others might say that the leaflets do nothing of the sort and, indeed, encourage such actions. When criminal sanctions are attached to a breach of the licensing conditions, it is incumbent on the board to be precise so that the person who has to comply with the conditions knows exactly what he is required to do. I do not think that that is possible.
There is an important task to be done in promoting knowledge. The Liberal Democrats have supported the all-party initiative, Scotland against Drugs, and we shall be taking to the buses on Tuesday to take the message around Scotland. We must not stop there; we must promote information through our schools and through health education. As the hon. Member for Strathkelvin and Bearsden rightly said, the message must also include alcohol as well as drugs and nicotine. I do not believe that the responsibility can adequately be discharged by he licensing boards when dealing with such applications.

Mrs. Adams: I support the amendment moved by my hon. Friend the Member for Dumbarton (Mr. McFall). While I recognise that it would be difficult to put the provision into practice, it would be remiss of us to miss the opportunity at least to try to promote some of the health messages that we have heard from the hon. Member for Strathkelvin and Bearsden (Mr. Galbraith).
In the midst of our discussions, we may have lost the message of the dangers of alcohol and nicotine. We are aware of the dangers of drugs. All hon. Members have desperately tried to promote the message that drugs are exceptionally dangerous. We must not lose sight of the fact that many people are dying of alcohol and alcohol-related diseases, and of nicotine-related diseases. No end of organisations are willing to come to venues such as raves and clubs to promote good health practices and to mix with young people. Whether leaflets are used or information is circulated via anti-drugs and anti-alcohol organisations, we must try to put some of the measures into practice, not simply leave it to chance. If we do not take the amendments on board, we shall be missing an opportunity.

Lord James Douglas-Hamilton: New section 18A spells out the purpose for which boards, having concluded that an event is a relevant one, attach conditions to the liquor licence. Following debates in Committee, that purpose was extended to safeguarding the health and safety of people attending relevant events. The change was warmly accepted by hon. Members.
As the hon. Member for Paisley, North (Mrs. Adams) said, amendment No. 18 would extend that purpose still further. That would be a praiseworthy aim if it achieved any further benefit. However, like the hon. Member for Orkney and Shetland (Mr. Wallace), I do not believe that it does. Protecting the health and safety of young people is an all-embracing objective that must reasonably imply the inclusion of welfare, so a specific reference is unnecessary.
Amendment No. 19 would introduce a second purpose for attracting conditions to licences. While I agree with the essence of the point, the change is unnecessary.
Of course alcohol and drug misuse is detrimental to health and safety. Under new section 18A, a board is empowered to attach appropriate conditions to a licence to achieve the objective. A board is surely best placed to gauge how to achieve that aim in any particular circumstances, which is why it should be provided for as a condition.
The terms and conditions that boards should attach to licences will be fully covered in the guidance to be issued by the Scottish Office following consultation. Boards will be fully aware that informing people about the dangers of drug misuse is part of the Bill's purpose. As we have already debated and confirmed, if boards do not attach appropriate conditions to licences, the Secretary of State will have the power to prescribe the conditions that boards will have to attach.
Amendment No. 17 is simply consequential on the other two amendments. I trust that I have explained why the amendments are unnecessary, although their purpose is praiseworthy. The terms of the Bill cover the points raised.

Mr. McFall: I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. McFall: I beg to move amendment No. 22, in page 2, line 1, leave out
'at which it appears to the board'
and insert'
'in respect of which the board has received specific information'.
The amendment is concerned with specificity rather than vagueness. The Bill states that the appearance of the possibility of the misuse of drugs at events is a sufficient basis for a licensing board to act. The amendment requires the board to have specific intelligence that offences may be committed. The Minister knows that we have raised the issue with him before. I believe that he has said that the Government consulted the Convention of Scottish Local Authorities and it was content with the provision, but it is important to specify what the licensing board has to know.
Under the Bill, the so-called information could be a rumour—one member of the board could hear it and decide to act. That member may have listened to a chief constable or another person's competitor. The wording is too vague, and it would be better if it were stated in the Bill that the board had received specific information.
I am aware that, if a chief constable gives information, it could be confidential. The amendment allows for that information to remain confidential, but it must be specific. The amendment is aimed at tying down the information to being specific rather than vague. The Minister is aware of our concerns.

Ms Roseanna Cunningham: I support the amendment. I am uncertain about its precise wording, but the tenor is right. I have been concerned that this part of the Bill has insufficient legal clarity and that licensing boards will be laid open to challenges if they take decisions on the basis of how matters appear to them, without having anything much to back up their decisions.
I understand the Government's position—they do not want to narrow the board's flexibility too much and introduce a standard with which, until now, they have not

had to deal. If the Bill is to proceed, it would be useful if the Government could take on board our concerns, which are partly echoed by the police.
I have contacted my local police force on the subject and they expressed a little concern about the wide way in which the provision is drawn. It was said that, if the police were asked to advise, it would be difficult for them to envisage an event about which they could say that it fell outside the criteria, but they could think of many events at which it would be unlikely that offences would take place. Including a tighter definition of what should appear before the board when it makes its decision would be helpful in the longer term.

Mr. Menzies Campbell: The hon. Member for Dumbarton (Mr. McFall) has done us a service by introducing the amendment, as it allows the opportunity for some consideration of the language to which the amendment is directed. The Bill says that the new section applies to any event
at which it appears to the board
that offences may be committed.
The difficulty is that the scope of those words is extremely wide. As the Minister will be well aware, licensing boards are not bound by the strict rules of evidence. They are entitled to have regard to hearsay evidence, and they often proceed on the basis not of formal, evidence but of ex parte statements. That has been the custom of the licensing board in Glasgow from time immemorial.
As that is the standard of evidence that licensing boards are entitled to adopt, when one produces a statutory provision that is drawn in such wide terms as the present provision, one allows for the possibility of vague rumour or an unsubstantiated attempt by a competitor to do down the business of someone who is a commercial success and is causing envy or detracting from other commercial opportunities. Although the hon. Gentleman's amendment, which refers to specific information, may not be correct in its precise phrasing, he is right to argue for greater precision as to what a board is entitled to rely on.
As the hon. Gentleman was speaking, it occurred to me that it might be possible to insert some reference to those who are entitled to object to the awarding of a licence—for example, a chief constable, a community council or a person owning an adjacent or neighbouring property. Such people are provided with a statutory right of objection when any application is made for what might be called in this context a full licence. I think that that would be more specific than what presently appears to be an opportunity for the board to hoover up scraps of information from anywhere in order to justify a decision.
The difficulty is that the words
at which it appears to the board
give a quite extraordinary discretion to the board, which it would be very difficult to challenge on the ground that the discretion was exercised unreasonably. Therefore, the hon. Gentleman's amendment points to a part of the Bill where the lack of precision of language is a substantial defect.

Lord James Douglas-Hamilton: The hon. and learned Member for Fife, North-East (Mr. Campbell) speaks from considerable experience in handling such cases. However, I remind him of the right of appeal to which reference is made in the Bill a few paragraphs later.
I am grateful to the hon. Member for Dumbarton (Mr. McFall) for explaining the purpose of the amendment. In Committee, we debated the pros and cons of the wording of the present characteristic. One of the purposes of the Bill is to provide a framework within which licensing boards will be able to make their own definition of relevant events. That is achieved by setting out certain characteristics that provide local authorities with the flexibility to address a problem whose nature may change over time.
The hon. Member for Perth and Kinross (Ms Cunningham) is correct in thinking that we did not want to narrow that flexibility too much. A change was proposed in Committee that we felt was too restrictive and would have fettered the board's discretion. However, I promised to consult the Convention of Scottish Local Authorities on the matter, and it responded with concern. It made clear its strong opposition to the amendment tabled in Committee. It felt that it would not assist boards in any way and would prevent their discharging their functions properly. We listened to the advice from the practitioners, which effectively confirmed our original belief.

Dr. Norman A. Godman: What guidance can an objector secure? I speak not of a chief constable but of someone who lives nearby and does not have the means to obtain legal advice. Are there any guidelines for such objectors?

Lord James Douglas-Hamilton: No. However, the hon. Gentleman may submit proposals to cover that issue in the guidance. I sent a copy of the guidance to all members of the Committee. The hon. Gentleman escaped serving on the Committee on this occasion, so I shall send him a copy. It is not too late for him to propose any amendments or drafting changes if he so wishes. We shall look carefully at any suggestions that he makes.

Mr. Wallace: In replying to my hon. and learned Friend the Member for Fife, North-East (Mr. Campbell) earlier, the Minister said that someone who was affected by the amendment would have the right of appeal. Does he agree that the right of appeal as set out in new subsection (5) relates to the terms of any condition that might be imposed under a subsection? The amendment addresses the definition of an event to which conditions might apply. It addresses not the terms of the condition but whether any conditions should apply at all. In that case, what legal remedy would be available to someone who feels that the licensing board has taken account of unsubstantiated tittle-tattle?

Lord James Douglas-Hamilton: The right of appeal refers also to the refusal of consent under subsection (4)(a). We consider that to be an important safeguard for the individuals concerned.
Amendment No. 22 is far less flexible than the reasonable suspicion test which was proposed in Committee. It also begs a number of questions: from whom will the specified information come, what form will it take, what evidence will be required to support it, what must be revealed to the licence holder, and so on?
There is no question that, when considering whether to apply the relevant characteristic, a board could not have regard to hard information provided by a reputable source such as the police.
As drafted, the provision allows the board to take account of other issues, such as local experience, which the amendment would prevent. I understand that hon. Members are concerned that boards may exercise their discretion too freely and that their decisions may have important consequences for licence holders. We believe that the present wording allows boards to take note of their own or other parties' apprehensions that drugs offences may be committed at events held on premises in respect of which a licence application has been made. On the basis of that explanation, I hope that the hon. Member for Dumbarton will withdraw the amendment.

Mr. McFall: I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: No. 2, in page 2, line 4, at end insert—
'(3A) The Secretary of State may, by order, prescribe the conditions which are to be attached to a licence or permission under this section, and an order made under this subsection may prescribe—

(a) the terms of any such condition; or
(b) the description of any such condition, the terms of which shall be specified by the licensing board, and such an order shall be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.'.

No. 3, in page 2, line 6, after 'above', insert
'or to the power of the Secretary of State to prescribe terms or descriptions of conditions under subsection (3A) above'.—[Lord James Douglas-Hamilton.]

Lord James Douglas-Hamilton: I beg to move amendment No. 4, in page 2, line 10, leave out from 'board' to end of line 13.

Mr. Deputy Speaker: With this, it will be convenient to discuss also Government amendment No. 6.

Lord James Douglas-Hamilton: Clause 1 allows licensing boards to sub-delegate some of their powers to set conditions to third parties. The hon. Member for Dumbarton (Mr. McFall) tabled an amendment in Committee to remove the power of sub-delegation from the Bill, because it was felt that, as licensing boards were now being given a wide power to impose conditions directly under licence as opposed to using the byelaws route proposed originally, they should retain sole responsibility for their action.
I undertook to consult the Convention of Scottish Local Authorities on the matter and to return to it when I had the convention's views. COSLA does not object to the retention of the provision, but it feels that a board's ability to operate the requirements of clause I properly would not be affected adversely if it were removed. In light of COSLA' s response and the general feeling that the boards should be solely responsible for the matter, I accept that the reference to sub-delegation should be removed from the Bill. The hon. Gentleman will recall that that was his proposal in Standing Committee. Amendment No. 4


achieves that objective and, in so doing, I hope answers the question raised by the hon. Gentleman. Amendment No. 6 is a consequential drafting amendment. I commend the amendments to the House.

Mr. McFall: I thank the Minister for taking on board those concerns. We are satisfied with both the amendments.

Mr. Menzies Campbell: One practical matter arising out of the fact that there is to be no delegation of responsibility is that the board will have to meet formally to deal with such cases. Some consideration may have to be given to the fact that the board may have to meet at short notice and that may have administrative consequences for the licensing boards. Although I accept the amendment and the basis on which it has been proposed, boards may have to overcome some consequential administrative difficulties to fulfil their responsibilities which are incapable of delegation.

Amendment agreed to.

Amendments made: No. 5, in page 2, line 16, after 'condition', insert
'(other than the terms of any condition prescribed under subsection (3A) above) '.
No. 6, in page 2, line 18, leave out '(4)(a) ' and insert '(4) '. —[Lord James Douglas-Hamilton.]

Mr. McFall: I beg to move amendment No. 25, in page 2, line 24, leave out 'all reasonable' and insert 'such'.

Mr. Deputy Speaker: With this, it will be convenient to discuss amendment No. 26, in page 2, line 25, after 'steps', insert
'as appear reasonable to him'.

Mr. McFall: Amendment No. 25 affects clause 1(7) in which the Bill sets too high a standard and is not sufficiently subjective. That is a matter for debate, but I would like the Government to consider it.
Amendments Nos. 25 and 26 would ensure that the defence of reasonable compliance relates only to such steps as are reasonable to the licence holder, the employee or the agent. Under the Bill as drafted, the individual would need to take "all reasonable steps". I would ask the Minister whether it is reasonable to expect people to take every reasonable step. One can only expect people to take the steps that seem reasonable to them. Amendment No. 26 would inject some subjectivity into the test, instead of the absolute requirement that appears to be in the Bill.

Lord James Douglas-Hamilton: We looked at the subsection quite hard. New section 18A(6) provides that a licence holder, his employee or agent shall be shall be guilty of an offence if he contravenes any condition attached to the licence or permission under new subsection (1).
To preserve fairness, new subsection (7) provides for a defence. As drafted, the defence consists of an objective test whereby the person charged has to prove that he took all reasonable steps to comply with the condition. That is a common requirement in law and is mirrored elsewhere in the Licensing (Scotland) Act 1976. The court will judge whether each person charged took all reasonable steps.
Amendments Nos. 25 and 26 would introduce a different defence—that a person took such steps as appeared reasonable to him to comply with the condition. That is a subjective test. One person may consider that a token effort to comply with the condition is reasonable, while another might consider it reasonable to go to a considerable effort to comply with a similar condition. Such a defence would lead to inconsistency and unfairness and would undermine the criminal sanctions in the new section 18A. I hope that the hon. Gentleman will take note of the argument and withdraw the amendment.

Mr. Wallace: I support the Minister's comments. Amendments Nos. 25 and 26 would weaken an otherwise reasonable test, if I may use that word. At the end of the day, it must be for a sheriff or a jury to decide whether any steps taken were reasonable.

Mr. McFall: I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: No. 7, in page 2, line 31, leave out 'and'.

No. 8, in page 2, line 34, at end insert 'and
prescribed conditions" means the conditions prescribed by the Secretary of State under subsection (3A) above.'.

No. 15, in page 2, line 38, at end insert—

'Conditions for existing licences

18B.—(1) This section applies to premises in respect of which a licence has been granted, whether before or after the coming into force of this section, under section 17 of this Act where no conditions have been attached to the licence in pursuance of section 18A of this Act.

(2) Where it appears to a licensing board that an event to which section 18A of this Act applies may be held on premises to which this section applies, the board shall convene a meeting for the purpose of attaching to the licence the conditions specified in subsection (1) of that section.

(3) The clerk to the licensing board shall, not later than 21 days before the date of the meeting to be held under subsection (2) above, serve on the holder of the licence and send to the chief constable a notice of—

(a) the meeting;
(b) where the Secretary of State has prescribed the terms of any prescribed conditions, such terms;
(c) in the case of any other prescribed conditions, the terms proposed by the board; and
(d) where the board proposes to attach any other conditions to the licence, the terms of such conditions.

(4) At the meeting held under subsection (2) above, unless the holder of the licence satisfies the board that no event to which section 18A of this Act applies will be held on the premises, the board shall attach to the licence the prescribed conditions and such other conditions as it considers necessary in the terms determined in accordance with subsection (5) below.

(5) In determining—

(a) whether the board is satisfied as mentioned in subsection (4) above; or
(b) what conditions (other than prescribed conditions) to attach to a licence or the terms (other than such terms as are prescribed) of such conditions,
the board shall have regard to any observations submitted by the chief constable and any other person or body mentioned in section 16(1) of this Act.

(6) Subsections (2) to (4) of section 16 of this Act shall apply in relation to any observations made under subsection (5) above as they apply in relation to any objection made under that section; and for the purposes of such application any reference in the said subsections (2) to (4)—

(a) to an application shall be construed as a reference to conditions proposed to be attached to the licence;
(b) to the applicant shall be construed as a reference to the holder of the licence;
(c) to an objection shall be construed as a reference to an observation;
(d) to the proper address of the applicant shall be construed as a reference to the address at which notice is served on the holder of the licence under subsection (3) above,

and cognate expressions shall be construed accordingly.

(7) The terms of conditions to be attached to the licence in pursuance of subsection (4) above are—

(a) in the case of the prescribed conditions—

(i) where the terms of any condition have been prescribed, such terms;
(ii) where the description of any condition has been prescribed, such terms as the board considers appropriate;
(b) in the case of any other condition notified under subsection (3)(d) above, such terms as the board consider appropriate; and
(c) in the case of any condition not so notified, such terms as are agreed with the holder of the licence.

(8) Subsections (4) to (9) of section 18A of this Act shall apply to conditions attached to a licence under subsection (4) above as they apply to conditions attached to a licence under section 18A(1) of this Act.

(9) The clerk to the licensing board shall forthwith intimate to the holder of the licence—

(a) where the board is satisfied that no event to which section I 8A of this Act will be held on the premises, that fact; and
(b) where the board attaches conditions to the licence, such conditions by sending to the holder of the licence a copy of the licence with the conditions attached.

(10) In this section "prescribed conditions" has the same meaning as in section 18A of this Act.'.

No. 11, in page 2, line 42, after '18A(1) ', insert 'or 18B(4) '.

No. 12, in page 2, line 46, after '18A(1) ', insert 'or 18B(4) '.—[Lord James Douglas-Hamilton.]

Order for Third Reading read.

Lord James Douglas-Hamilton: I beg to move, That the Bill be now read the Third time.
I shall speak briefly and mention only one or two key points. The Special Standing Committee heard evidence from interested parties at sessions in Stirling, Ayr and Inverness. The hearings were a considerable success and made the future progress of the Bill more satisfactory.
The parties included such organisations as the Convention of Scottish Local Authorities, the Association of Chief Police Officers in Scotland, Sheriff Neil Gow, the Law Society of Scotland, medical, health and education experts and the owners of venues for raves.
We listened to the concerns expressed in Special Standing Committee and decided to give licensing boards a free-standing power with a requirement to apply conditions where appropriate. Other changes followed the

Special Standing Committee evidence, including a significant amendment enabling the Secretary of State to ensure consistency in practice throughout the country.
I believe that the Bill will make a valuable contribution to liquor licensing practice in Scotland. I have always said that it is a relatively limited measure, but it flags up our resolve to deal with the evil of drugs, to protect young people and to take every measure that is necessary in that process, of which this is merely one.

Mr. Galbraith: In continuation of the spirit of which the Minister spoke—

Dr. Godman: My hon. Friend will be brief.

Mr. Galbraith: As my hon. Friend always says, I shall be brief. However, my hon. Friend normally follows that phrase with a 45-minute speech. I shall not do that.
Let me once again commend the procedure in the Special Standing Committee. I served on the Special Standing Committee considering the Children Bill, as did the Minister, and its scrutiny greatly helped that measure. This Bill was almost rewritten as a result of the same procedure and that is to be commended.
I also commend the speed with which the Bill has been introduced to deal with an identified problem. In many ways, legislation reflects the failure of society, as we have not been able to do the right thing without it. However, when it is necessary, we should introduce it quickly and make it short. The Bill is a model of that process.
Let me emphasise a point that I tried to make time and again on Second Reading. The Bill is not a drug prevention measure. On Second Reading, the Minister attempted to link it with drug prevention schemes in Scotland. It is a health and safety Bill involving raves. It is not a drug prevention Bill and the Minister demeans it if he persists with that idea.
Finally, I should like to address the criticism that we cannot have chill-out areas and various other facilities as that assumes that we are in favour of people taking drugs. As my hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) said, the fact that we have fire extinguishers in halls does not mean that we are in favour of fire and the fact that our hospitals have facilities for dealing with people who have been stabbed does not mean that we are in favour of people being stabbed.
Legislation has to consider the real world and not moralise about it. We must produce legislation not for the world as we would like it to be, but for the world as it exists, the Bill certainly does that. I welcome it, and commend it to the House.

Mr. Menzies Campbell: In the calm, rational and consensual atmosphere in which we have discussed the Bill this evening, it is easy to forget the tragic events that prompted it. Those tragic events caused great suffering to families, raised great apprehension in the minds of many people and created considerable public concern. The Bill would meet the difficulties that gave rise to that public concern.
One cannot always be 100 per cent. confident that a measure passed through the House will meet the problem for which it is designed, but it is clear from the spirit


that has characterised not only the Second Reading debate before the Grand Committee—that was something of an historical first—but this evening's proceedings and the Grand Committee, on which I did not have the privilege to serve.
The Bill comes through proceedings with a considerable good will attached and a strong belief among those who had any responsibility for its passage through the House that it will meet the problem for which it was originally designed. I am happy to support the Bill on Third Reading; the sooner it is enacted, the better.

Mrs. Adams: I, too, am happy to support the Third Reading. It has been a good Bill, a model of how to pass necessary legislation. By and large, we have been in agreement and we have tried hard to come up with answers where none existed before we began. As my hon. Friend the Member for Strathkelvin and Bearsden (Mr. Galbraith) said, this is primarily a health and safety Bill. If it saves just one life in Scotland, it will have been a success.
Over the past couple of years, we have all been confronted with worries about young people going to raves and places of great danger. I hope that the Bill has removed that danger, and that from now on young people will be able to spend time dancing without fear of losing their lives.
I know that some have expressed concern about the words "chill out". I am not too worried about chill-out areas—perhaps parents are more worried about them than children are, though. Young people know better what they are than we do: we are just not accustomed to the term. I sometimes think that a chill-out area in the House would not be a bad thing; it might help to pass legislation such as this in good order.

Mr. Gallie: The term "ice hockey cooler" might also be useful in this context.
I too welcome the passage of the Bill. The hon. and learned Member for Fife, North-East (Mr. Campbell) referred to the tragedies that lay behind the Bill, which is what brought me to my feet. Many people thought that the impetus for the Bill came from the tragic events at Hangar 13, where there were three deaths. Sheriff Neil Gow's contribution, in the public hearing on the deaths that he held at Ayr, certainly influenced many people to think about a Bill such as this.
As for Hangar 13, I honestly believe that young people in my constituency would not have been deprived of their dancing facility if the Bill had been on the statute book

before hand. It would have provided reasonable guidelines enabling the licensing board to stipulate the conditions for dancing to be allowed at Hangar 13. That would have been valuable indeed. Had there been controls on stewarding, paramedics and supervision inside the dance hall at an earlier stage, the closure might have been prevented.
I welcome the Bill and commend the Minister of State on the manner in which he has taken it through its various stages. I also commend all hon. Members who have participated in the debates.

Ms Roseanna Cunningham: I too support the Third Reading of the Bill. It is a useful example of legislation arising out of specific circumstances and being designed to deal with them.
It is important to restate the fact that the Bill does not condone drug use. As I am sure all hon. Members agree, we should refute any suggestion that that is what it is designed to do. It is unfortunate that such suggestions have emanated from people such as whose who served on the former Glasgow licensing board. The position that the board adopted flew in the face of reality. The Bill is about dealing with real life—it is important that legislation should do that.
I recall Crew 2000 giving evidence to the Committee about Ecstasy-related deaths, pointing out that most of them resulted from the way the drug was used, not from the drug itself—an important distinction, which is acknowledged in the conditions laid down by the Bill. If it transpires that disparities arise across Scotland, from board to board, I hope that there will be an attempt to monitor and deal with them.
The Bill is a specific one, designed to deal with a specific problem. Were it designed to deal with the wider problem of drug misuse, it would be a very different kind of Bill, because drugs are used far more widely than just in clubs. A recent survey conducted by Britain's top selling teenage magazine, Sugar Magazine, came up with some startling percentages. Members may be surprised to hear that cannabis is used by 40 per cent. of teenagers, 3 per cent. more than use tobacco. It appears that it is more popular among teenagers than tobacco. Neither statistic is to be welcomed, and I certainly hope that the campaign against tobacco will not be won only at the expense of increasing cannabis use. The survey just goes to show that drug taking is now endemic among certain groups of teenagers.
This legislation cannot begin to tackle that problem, but I commend it for achieving what it attempts to do.

Question put and agreed to.

Bill accordingly read the Third time, and passed.

Orders of the Day — Northern Ireland (Elections)

[Relevant document: The Memorandum relating to this Order contained in the Eighteenth Report from the Joint Committee on Statutory Instruments, House of Commons Paper No. 34-xviii.]

The Minister of State, Northern Ireland Office (Mr. Michael Ancram): I beg to move,
That the draft Elections (Northern Ireland) Order 1996, which was laid before this House on 29th April, be approved.
The draft order fills out the details of the mechanism by which the forthcoming elections in Northern Ireland are to be held. It fixes the date of the election at 30 May, in line with the Prime Minister's announcement of 21 March. Like the elections provisions of the Northern Ireland (Entry to Negotiations, etc) Act under which it is made, it is for use at a single election only; thereafter, it will be spent.
All the most significant features of the framework for the election were embodied in the Act which was approved by this House and another place last week. Briefly, the voters in the election will be all who are entitled to participate in local elections in Northern Ireland. The election will be based on a constituency list system, and five delegates will be returned in respect of the participating parties from each of the 18 parliamentary constituencies in Northern Ireland.
In addition, a further 20 delegates will be returned at regional level—two in respect of each of the 10 parties gaining most votes on aggregate across Northern Ireland which have submitted regional lists. From those delegates will be chosen teams to participate in the negotiations, in accordance with section 2 of the Act; and they will together constitute the forum set up by section 3.
That is the structure of the Act which this order now has to fill out. For convenience, we have as far as possible sought to apply existing legislation with which those involved in electoral matters in Northern Ireland will be familiar. Thus, the order applies broadly the existing law relating to parliamentary elections, with only those modifications that we believe necessary to accommodate them to the electoral system set out in the Act. We believe that proceeding in this way makes the legislation simpler to understand and apply, and more manageable than trying to set out a comprehensive new code.
The part of the order which I know to be of particular interest to the participating parties in the election concerns the arrangements for nominating representatives to hand in their lists of candidates. The draft order originally provided that party lists should be submitted at the chief electoral officer's headquarters in Belfast. That has been changed in this order, so that they may be submitted to any of his offices, thereby introducing a local element to the procedure. He will be required by the legislation to give notice of precisely where and by when constituency and regional lists should be submitted. I am sure that nominating representatives from all parties will make the most of this opportunity.
We have also borne in mind the fact that this is a novel system of election, and that the electorate will need to be sufficiently well prepared to play as full a part as possible. We have therefore arranged for two leaflet drops to all of Northern Ireland's 590,000 households. The first leaflet alerted people to the possible need for an absent vote,

explained the franchise and included a reminder of the need for a specified document to be presented at a polling station. The second leaflet, which will be delivered shortly, repeats the information about the franchise and specified documents, and explains how to vote and how the vote works. In addition, we have arranged a series of television and radio advertisements to encourage people to participate. These we will put out during the campaign.
The broadcasting media are an important part of modern elections, and it is important that their coverage serves the interests of voters. With that in mind, the Government have decided that, exceptionally for the elections, the provisions of section 93 of the Representation of the People Act 1983, relating to broadcasting, shall not apply. The unusual nature of the elections, involving votes for parties rather than individual candidates, means that the application of section 93 might cause problems in distinguishing the campaign in a particular constituency from that across Northern Ireland as a whole. We want to avoid potential for disputes between the parties and the broadcasters, with the consequences that that could have for electoral coverage.
The Government have presumed that broadcasters will share the view that the forthcoming important elections should be given balanced and fair coverage. That would reflect the inclusive nature of the approach that we have taken.
Mindful of the financial constraints on some of the smaller parties, we have made provision for unaddressed postal communications, which also need not state the name of the constituency. Nominating representatives and their parties will note that we have also applied provisions relating to electoral expenses for the election. I am sure that hon. Members will agree with me that limiting election expenses is an important part of our democracy, ensuring as it tries to do that an element of parity governs the electoral contest.
We could not simply apply the provisions as they stand for parliamentary elections, as those provisions relate solely to candidates. We have sought instead to apply an aggregate limit, the limit for each party being the limit for one candidate at a parliamentary election multiplied by the number of constituencies that it is contesting. We believe that that formula manages to preserve the principle of applying limits, while at the same time breaking the link with the individual constituency spending that has applied at other elections, by recognising that parties may wish, for example, to spend regionally rather than locally.

Mr. William Ross: Will the Minister assist the parties in Northern Ireland by stating what the total would be if a party decided to run five candidates in each constituency?

Mr. Ancram: If I have the leave of the House, I shall reply to the debate. It may be that I can give the hon. Gentleman the figures that will apply per party per constituency at that stage, and then allow him to arrive at the aggregate. His arithmetic may be every bit as good as mine.
We have tried to respond to some of the concerns that have been expressed by the parties. One example is the listing of the individual candidates who compose the constituency and regional lists. It would have been


impracticable to include those names on the ballot paper, not least because it would have made it too large to fit on the shelf of a polling booth.
Instead, we have made provision, as I said during the passage of what became the Northern Ireland (Entry to Negotiations, etc) Act 1996, for lists of the names on the parties' constituency and regional lists to be displayed in every polling booth in every polling station in Northern Ireland.
The House may be interested to hear what provisions have been applied for the count. Hon. Members will be only too familiar from their own experience of the rules that allow us and our partners, together with all other candidates and their partners, to attend a count. The rules will be no different in this election. Of course, there could be a far greater number of candidates wishing to attend the count at this election than is usual, given that a maximum of 155 candidates could, in theory, contest one constituency alone.
We gave serious thought to the practical problems that admitting such numbers may pose. We concluded, however, that it would not be realistic to seek to exclude candidates from such a key process. They will therefore be admitted to the count proceedings, with party agents or sub-agents. We shall leave it to the parties to respond responsibly.

Mr. John D. Taylor: Does that mean that all 2,000 candidates will be allowed to attend the count?

Mr. Ancram: The counts will take place on a constituency basis, where the allocation of delegates from the constituency lists will be made. As I have said, in our view that gives a maximum at worst of 155 candidates in one constituency alone. We are leaving matters to the responsibility of those concerned to ensure that attendance at the counts is conducted responsibly.

Mr. Peter Robinson: When will the votes be counted? Will the count be conducted the next day, or on the evening of the election?

Mr. Ancram: In due course, I shall give the hon. Gentleman the reference in the order. They will be counted the next day. The count will start the following morning. It is right, in the circumstances, that it should be done in that way.
To return to the question of the hon. Member for East Londonderry (Mr. Ross), if a party stands in five constituencies, the limit will depend on the constituencies in question. The amount that would normally go to each candidate in a parliamentary election will be allowable for each party standing in any constituency. The important feature is that that money does not have to be spent in any one constituency by the party. The party might decide to have a more regionally based campaign, and use the resources in that way. That degree of flexibility is an important part of the process.

Mr. William Ross: If a party is standing in all 18 constituencies, it seems that the total expenditure could be well over £100,000.

Mr. Ancram: I shall give the hon. Gentleman the relevant amount, and he can make his own calculation.
It is a similar amount to that which would be available to any candidate at an election. I think that the calculation was last made in 1994. Any party could receive only that amount times 18 if it stood in every constituency in Northern Ireland.
It is important that we proceed in this way. For example, the hon. Gentleman's party might decide that it wished to spend not the full allowance within each constituency but less in one constituency and more in another. It seems right that that flexibility should be allowed. For that reason—to create what we hope is a flexible system on behalf of the parties—we decided to operate in the way that I have outlined.

Mr. Eddie McGrady: Paragraph 76(2A)(a) and (b) give the block figures—£4,642 for a county constituency or a borough constituency, with an additional 5.2p for a county constituency and 3.9p for a borough constituency. We are not asking the Minister to engage in any mathematics. Do these figures apply per candidate or per party per constituency?

Mr. Ancram: They apply per party per constituency. What is entered in each constituency is a party list. The hon. Member for East Londonderry, who is an accountant, could make the calculations in his head far more quickly than myself. It is right that we allow flexibility, to ensure that the money can be spent regionally as opposed to merely locally. We have tried to allow parties the maximum flexibility in conducting their campaigns.
I have presented the scheme and some of the detail of the draft order. Much of the order recreates existing legislation. There are some technical terminological changes to address the particulars of the elections that we shall see take place on 30 May.

Dr. Norman Godman: The Minister mentioned the role to be played by both television and radio. What of newspapers?

Mr. Ancram: Obviously newspapers have an important role to play, but, as the hon. Gentleman will know, there were no restrictions on the way in which newspapers conduct themselves during election campaigns. I was referring to the removal of the provision which is normally applied in elections, because of the nature of this election. We look to the broadcasters to operate responsibly in the interests of fair coverage during the election.
The order represents the most reasonable approach to adopt, in the complex and technical body of electoral law, to the requirements of the forthcoming election. I commend it to the House.

Mr. Tony Worthington: I am grateful to the Minister for his introduction. I judge from the way in which we have started that the debate will liven up as people get into their mathematics. I was confused immediately, but, as people become clearer on the issue, there will be more coherent questions.
Let us not pretend that we will give the order the scrutiny it deserves, or that the way we are dealing with it is in any way satisfactory. I started considering the order at the earliest possible moment late on Monday afternoon.
I know that many other hon. Members will have had considerably less time to consider it and will not have been able to scrutinise it adequately, as I have not been able to do.
The order is important, because we hope that, against all the odds, successful all-party talks will take place following the election. If those talks are successful, the lives of all people in Northern Ireland will be transformed, but if some of the order is wrong, the only people who will be benefit from it are those who are not trying hard for a full peace and a broad constitutional settlement.
I raise those points because it is better to anticipate them now than for them to be used to upset or to cause controversy at the election—although I realise that we cannot amend the order, so the choice is whether to vote for or against it. We know that, were we successfully to vote against it, we would derail the elections, so it is not much of a choice.
This is a difficult order, because it is a mongrel election—it is unlike any others. In some respects, it is like a local election—the electorate is a local government electorate. In relation to the rules that are being followed, such as, for example, those on free post, it is like a general election. It also attempts something for the first time in Northern Ireland: a party list system, with a party rather than an individual as the candidate.
The Government said that they went about this in the simplest possible way: by not attempting to bring in major, new and substantive legislation. It is an incredibly difficult order, because it is possible to make sense of it only by reference to large parts of other legislation that are not in the Bill. It is impossible to make sense of the order without looking up 1983 and 1985 Acts. Whatever the outcome, however, we should congratulate the parliamentary draftsmen, who have had to struggle with a beast not of their own making. If, having produced the order, they are now brain-dead, I would sympathise with them.

Mr. Ancram: They have been stimulated.

Mr. Worthington: They have been stimulated by the production of the order, but it has had less than a stimulating effect on me. I suspect that some of the parliamentary draftsmen may be sleeping for several weeks after producing it.
Let me go through some of the points that have occurred to me in reading the legislation. On page 2, paragraph (6), will the Minister explain why he has taken his decision on overseas electors, and what is meant by "overseas electors" in this context? Is it simply people from Northern who are temporarily away from home, or is it long-gone expatriates? In the case of some interpretations of overseas electors, it would not be too serious, but if it is genuine Northern Ireland residents, members of the forces or others, it is an unfortunate decision, if I have read that correctly.
We have talked about election expenses. Again, I am by no means certain that 1 have read this correctly, but the point is important. The parties that are represented here will want to understand it, and to have it explained clearly by the Minister.
As the Minister will know, in a general election, there are tight restrictions on what candidates can spend in their constituencies, but no restriction on what is spent nationally—whatever "nationally" means in this context—by the parties. In the Bill, we see the familiar restrictions on constituency expenditure, but this election is different, because the candidate is the party, not an individual. Is it real to impose those limits in relation to constituencies, because the literature and propaganda for the whole of Northern Ireland are likely to be the same as for a part? The issue is the same in every constituency.
I know that that is an academic question for most parties, because they simply do not have enough money, but there may be parties with a lot of money to spend. Is it the case that there is no limit on the amount that can be spent on the election by those who have the money? There seems to be no restriction on expenses. A large amount can be spent Provincewide or UKwide, and the only limit on expenditure is the amount that people can raise. Perhaps the Minister will explain that.
The order contains no reference to rules about broadcasting. It is unfortunate that it was only in his speech and not before it that the Minister referred to the suspension of section 93, which deals with the rules that broadcasters have to follow.
I understand that their public service role, which places an obligation upon them in elections to give even-handed coverage to all parties, has been suspended. I suspect that public service broadcasters may still want to fulfil that role, but did the Minister means that there is no duty upon broadcasters to be even-handed to all parties, as happens in other elections? I should welcome some clarification.
I hesitate to return to the subject of party names, on which the Government made such a mess.

Mr. William Ross: Given that some moves are afoot in various parties in the House to have PR elections, should not this aspect of the legislation put down a marker of which everyone should take note? If there is a multiplicity of parties, which occurs under PR, section 93 would have to be suspended in all future elections in the United Kingdom.

Mr. Worthington: I am sure that the hon. Gentleman's point is valid, but I have enough difficulty learning for the present without trying to learn for the future. I hope that we shall all learn from this. Above all, I hope that the talks are successful.
As I say, I hesitate to return to the subject of party names, because the issue caused considerable contention in Committee. Schedule 1 (ii) allows some individual names on the ballot paper but not others, and that has been the cause of contention. I and may others cannot see the logic of it. In Committee, the Government said that the names could appear on the ballot paper only in the way that is set out in the schedule, but, of course, the law is only what appears in the Bill, and I cannot see where the Government get their authority for that in the legislation.
The law simply states that the Secretary of State shall cause to be published in the Belfast Gazette an initial list of the nominating representatives of the parties that are listed in the schedule. The Bill has been to the other place, and I assume that it has received Royal Assent and is now the law, but it does not state that the schedule contains


the only way to describe these parties. There is no prohibition in the schedule or in the relevant clause on the use of other names.
Rule 6(1) states:
A constituency or regional list submitted to the Chief Electoral Officer
shall state

"(a) …the name of the constituency;
(b) …in the case of a regional list, that it is such a list;
(c) …in the case of any list—
(i) …the name of the party".

There follow instructions about the address and so on.
Rule 12 states that a list
shall be deemed to be valid unless and until the Chief Electoral Officer decides that it is invalid.
It says that the chief electoral officer may hold a list invalid only if the particulars of a party or candidates
are not as required in rule 6(2) above
or
that the party is not a party listed in part II of Schedule 1 to the 1996 Act".
For the sake of argument, what would the electoral officer do if a party described itself as the Democratic Unionist Party (Ian Paisley)? It is undeniably the same party as the one listed as Democratic Unionist—DUP in the schedule. On what statutory basis would the electoral officer be able to deny its candidacy or change the way in which it is described? There may be a simple answer to that, but I raise it because the legislation is not clear.
We know what was said in Committee, but it is not clear in the legislation that a party cannot use some minor or major variation on its name as listed in the schedule. All that matters is that
the Chief Electoral Officer is entitled to hold a list invalid
only on the grounds that
a party is not a party listed in part II of Schedule 1 to the 1996 Act".
That is very different from saying that a party has to use exactly the same words. For whatever reason, a party might put its name forward in a different way. It would be a bold electoral officer who rejected the party on that basis, or sought to change the name by which the party described itself. I am open to explanation by the Minister. The Government made their intention clear during the debate in Committee, but I query whether they have been made explicit in the Bill.
Finally, there has been some controversy about the postal ballot arrangements, which were being centralised. Will it be possible to make postal ballot arrangements on a local, rather than a Northern Ireland, basis?
As I said at the outset, I have gone through the order in a short time and raised the questions that occurred to me. It is unfortunate that we are dealing with it in this way, because we will be denied the immense wisdom of lawyers outside Parliament and other people who know electoral law, who could have pointed out other discrepancies. I look forward to the Minister's response to my points.

Mr. William Ross: We are confronted this evening with the Elections (Northern Ireland) Order, which consists of no fewer than 30 pages

of tightly packed amendments. The hon. Member for Clydebank and Milngavie (Mr. Worthington) has done a good job in wading through it in the time at his disposal. He and the House know that they have had a chance only to scratch the surface of the order. Much more needs to be said.
I deeply resent the fact that names are not to be included on the ballot paper. Like it or not, the names of individual candidates have a bearing on whether a party gains votes in a particular area. Leaving names off is much to be regretted and bitterly resented.
The issue has been raised of the sums that can be spent in the elections. Several parties in Northern Ireland have no difficulty in raising money. They go along with a balaclava and a gun and ask for it. I suspect that one or two parties will have enough money to fight the election and spend the full sum.
This process is regarded by people in Northern Ireland as another step along the road to meeting the IRA deadline of 10 June. The Government are trying to create a body that will be powerless. Thanks be to God, though, the people of Northern Ireland, like people elsewhere in the United Kingdom, value their freedom and the electoral process, and are intent on making full use of it. I have no doubt that, whenever the forum is elected, the Minister will find considerable difficulty in trying to restrict what it says. It will, like all elected bodies, slowly but steadily acquire power.
We are faced with a order of 30 pages of amendments to the Northern Ireland (Entry to Negotiations, etc) Act 1996, the Representation of the People Act 1983, the Representation of the People Act 1985, the Elected Authorities (Northern Ireland) Act 1989—four Acts of Parliament, three of which deal purely with representation of the people, and the latest Act, which was, of course, passed by the House last week—plus the Representation of the People (Northern Ireland) Regulations 1986, the Planning (Control of Advertisements) Regulations (Northern Ireland) 1992 and the Election Petition Rules 1964. The order amends four Acts of Parliament, two sets of regulations and one set of rules.
Every one of those bodies of legislation is complex enough in itself and very difficult for the ordinary citizen, coming face to face with it for the first time, to understand. They all set out penalties for transgression, up to and including the disqualification of candidates and persons elected. The correct procedures for the elections can be determined only by reading the list of changes in those 30 pages across the previous Acts, regulations, and so forth, to which they refer.
As it happens, the order was considered at yesterday's meeting of the Joint Committee on Statutory Instruments, of which I am a member. I should like to apologise on his behalf for the absence of the hon. Member for Denton and Reddish (Mr. Bennett), the Chairman of the Committee, who is unavoidably absent from this debate. I think that he would have been very happy to say some of the things that I am saying.
We were advised that the procedure being used to make the changes was simple. As a Member, I am the first to accept the logic of that advice. The procedure is simple and easy for us in this place and those who concoct amendments to Bills to understand. It is presumably also easy for lawyers to understand. Indeed, the field is a paradise for lawyers, so I do not see how anyone in the


time available could have gone through the order in the detail that is necessary to be certain that everything is absolutely correct, as is essential in such orders.
The elections in Northern Ireland are not all going to be run by lawyers. They will be run by ordinary men and women, who will have to run elections for their party, or, occasionally, for themselves or for a friend who is standing as an independent candidate. If one is, say, a lay member of the population in Northern Ireland, without any legal training or qualifications, one might be lucky because at least one would have an excuse when acting as an election agent.
A trained lawyer will not have that excuse. Such trained lawyers will find that they are supposed to have a total grasp of the huge and complex body of legislation and the effect that each and every one of the 30 pages of amendments have on it. Yesterday, the Committee took the view that such a procedure was simply not good enough. The Committee said that the legislation and the rules should be plain and easy to understand. This is, after all, legislation dealing with the electoral process and the basic right of democracy—the right of people to vote.
The Committee also noted that very few people would have all the necessary Acts, rules and regulations. I inquired for them at the Vote Office this morning, but they were not there, and they are not there yet. The reason is that such documents dating from 1964 are not held in this place. One must ask how hon. Members were to start the cross-referencing work, even if we had the time to do it this week. How were we to get the documents? They were not available. One would have to go to the Library to get the file copies and sit down with a couple of wet towels and ice around one's head while one waded through the whole thing.

Mr. Robert McCartney: Recently, I was the senior counsel for the hon. Member for Belfast, West (Dr. Hendron) when he was faced with an electoral petition, and I therefore had cause to peruse in great detail the electoral provisions as they then stood. I can endorse entirely everything that the hon. Member for East Londonderry (Mr. Ross) has just said.
It is not just a question of it being difficult for a layman: I can assure the House that, for a senior counsel of 20 years' standing, the problems then presented by the representation of the people legislation were immense. Now that this new batch of legislation has been added, those problems will be far beyond the ken of any layman, and will strain the resources of many trained lawyers.

Mr. Ross: We have just heard one of the most eminent banisters in Northern Ireland—a man who has acted in the courts on this very issue—explaining how difficult it is for lawyers. I would say to the hon. and learned Member for North Down (Mr. McCartney)—meaning no harm to his general profession—that the only defence that any defendant in such a case could have now is the fact that he is not a lawyer. He might plead ignorance, which, although it is no real defence, might make the judge look more kindly upon him.
No civil servants—either from the Home Office or the Northern Ireland Office—were present at the Committee last night to answer questions, and the Committee did not

take kindly to that. I hope that the House will realise that the Committee members were in some difficulty, because we knew that the legislation was necessary, and that the elections could not be held without it.
We therefore adopted the device of publishing immediately an extract from the Committee's 18th report, which sets out our opinion. This has been available in the Vote Office today. The Committee members point out in the extract their regret that a full text of this legislation has not been published so that people could see the whole electoral law for this election set out in a single and cohesive structure. Even at this late stage, the Government should go down that road.
The Committee says in its paper that it does not wish to draw the attention of both Houses to the instrument. But the object of having the paper in the Vote Office is to draw the attention of this House and the other place to the failings that we find in the legislation. I therefore hope that the Minister will take on board the views of the Committee, and no doubt we will hear more about this later.
As an annexe to the paper, the Northern Ireland Office memorandum of 26 April has been published. It is labelled in the paper in the Vote Office as a memorandum from the Home Office, but that is a humbug that we are prepared to put up with in this place sometimes to give information to hon. Members and to the world outside.
The Committee's view was that there should be a full text for the benefit of those who have to operate within the legislative framework created by the original legislation, as modified by the order. That is not so much a view as a vital necessity if we are to avoid the possible consequences of getting the whole process wrong.
Even when the order has been sorted out, the problems will not be over. The timetable for elections is always tight, even in an election where the rules have long been in existence and are well understood by those participating in and organising it, and by the lawyers who usually deal with any thorny problems that come up. But on this occasion, we do not have that advantage of time.
This stuff appeared only within the last few days. We simply do not know what will be acceptable. If we wind up in the courts, we could find, far too late, that a whole party has been disqualified. People could be chucked out if they get it wrong—I do not think that I am going too far in saying that. That is a possibility. I hope that the Government have taken that on board, or perhaps they are deliberately refusing to do so. This is a serious matter.
We also have all the hullabaloo about application forms for postal votes. They are to be available only to the individual applying to a central point. Why should that be so? That has never been the case before. It was possible for someone to go along to the electoral office to get a form for themselves and their neighbours.
The application form is not a postal vote; it is only an application form. It is up to the chief electoral officer for Northern Ireland, formidable man that he is, and his assistants, to determine whether an application is correct and should be granted. It has been the practice to give a number of forms to the parties and the candidates. People should find it easy to vote. Surely it is part and parcel of our democratic standards and procedures that we should not try to make it difficult to vote.
But in Northern Ireland during the past 20 years, there has been the hullabaloo about getting the forms, the problem of identification whenever we arrive at polling stations, and the difficulty sometimes of getting to polling stations because of security arrangements. Voting has been made incredibly difficult for people. It is all right for those of us who run elections and are being elected—we know what we can and cannot do—but the ordinary citizen votes once every four or five years, and, if they are refused a vote because they do not have the correct documentation, they go away and do not come back.
During the Bill's passage last week, I asked the Government to take on board the necessity of keeping a record of the people who were refused a ballot paper, and the reasons for it. I fear that that has not been taken on board. Why are the chief electoral officer and his officials so anxious not to get the facts? This is a matter about which we have complained in this place and in Northern Ireland for years, but no one wants to know.
No one wants to know why fewer people vote in Northern Ireland. The answer is simple, and glaringly obvious. Sometimes it is hard to lay one's hands on the necessary document. Some people do not have any acceptable document.
My right hon. Friend the Member for Lagan Valley (Sir J. Molyneaux) pointed out this evening that this election takes place at the end of the month. The old-age pensioner will be trotting along with her pension book. If it has no valid payment order, it will not be good enough. That might be the only document that thousands of people have. There will certainly be some who will not have a valid pension book, and that may be the means by which they are denied the right to cast their vote. That is not acceptable. It is about time that the Government got their finger out and found out how many people are refused.
Above all, it is about time that the Government got their finger out and had a single document, such as a proper identity card, with a photograph on it in Northern Ireland. If there was a photograph, even of the standard that one sees on passports and driving licences, it would at least give some idea. Photographic machinery has improved enormously and most of us recognise ourselves even if we are not too pretty. If we had that, everyone would know that they had to take it with them, and everyone would know that, if they presented it, they would be given their ballot paper.
We know that there are those who practise intimidation and others who have been stealing the document known as the medical card, which we were told by the hon. Member for Belfast, West (Dr. Hendron) is so easy to forge. All that would disappear. There seems to be no desire to make life difficult for the evildoer, only for the law-abiding.
In his opening remarks, the Minister said that the nominations for candidates would be submitted at different places. He did not make it clear, at least not to me, whether the nominating member from each party had to be present, or whether an agent, the candidates or somebody else could hand in the paper on his behalf. What we have seen so far is not good enough.
Will the Government, even at this late stage, do a full print of the legislation, so that we know a little more about where we are and so that those involved can work through

the legislation and keep within the law and proper procedures rather than go through what I believe will turn into chaos as a result of this incomprehensible order.

Mr. Eddie McGrady: This is the third time in as many weeks that we have dealt with the election in Northern Ireland. The only motivation driving my party in that respect is the hope that we shall have a full complement at the all-party negotiating table. We knew that an election was unnecessary to enable parties and groups to come to the table, but because of certain requirements and self-imposed obstacles of other parties, we are in this position.
We have an ad hoc position, an ad hoc proposal, ad hoc legislation and now an ad hoc order. Like many hon. Members who have already spoken, I believe that it would be dishonest to pretend that we have had anything other than a superficial look at the document—superficial not only in terms of what is before us, but in terms of what is not before us. As has been said, it would need several constitutional and electoral lawyers to give us any idea about the quagmire in front of us.
It is in that context and with tongue in cheek that I tell the House that I obtained a copy of the order yesterday and tried to pick out one or two things that were perhaps obvious, but I am sure that there are many subversives in it that will not surface until they hit us hard during the election campaign.
I must refer to the order by page numbers because it is difficult to know what section we are talking about. On page 13, there is a reference to section 144(2C) of the Representation of the People Act 1983, which deals with the validity of an election. It states:
Where the election court determines that the election of a delegate or delegates of a particular party was void but that the election as a whole in the constituency to which the petition relates was not void, the return of delegates under paragraph 14…shall be calculated again and the votes given for that party in that constituency shall be disregarded.
I am not sure that I understand that. I understand what it says, but I am almost frightened of its implications.
It appears to be saying that, if a nominee of a party in any constituency for some reason transgresses the complexity of this and other legislation—ignorance of the law being no excuse for good or for evil—and he is declared a void delegate, the entire party in that constituency is declared void. His colleagues will be deemed not to be delegates because of his illegal act, even though they have not committed a wrongful act. Is that the right interpretation of the order? It seems to be confirmed in section 157(2B), which states:
Where the election court determines that the election of a delegate or delegates of a particular party was void but that the election as a whole in the constituency to which the petition relates was not void, the court shall not order a fresh election.
The party groupings will be dependent on the absolute integrity and validity of every candidate in every election. This is a huge and complex document and it has huge ramifications. Perhaps the Minister can answer that point in his reply.
I refer to rule 1 and to the timetable. The nomination papers will be submitted to the chief electoral officer—he is required to validate nominations within one hour for other elections. Is rule 1 telling us that, if we allow for


various bank holidays and the like, two days are to elapse before the candidate or series of candidates will know whether they are validly nominated?
The hon. Member for East Londonderry (Mr. Ross) said that there is some concern about the practicality of the administration of the election and the centralisation of almost everything to the chief electoral officer. There is no hint that the normal devolution of authority will take place through the deputy electoral officer and other officers. It appears to me that the validation of postal applications—as well as the issuing and researching of them—will be centralised. That is totally at variance with our normal practice. It is administratively clumsy and will lead to all sorts of complications and challenges.
Rule 29, on page 20, relates to the information that will be given at polling stations. During consideration of the Northern Ireland (Entry to Negotiations, etc) Bill the Minister said that there would be a simple electoral process for the voter—that he or she simply had to put an X on the ballot paper. He then succumbed to pressure that a lot more information would be required regarding all the candidates and parties, both for the constituencies and for the regional listings. It was decided that the booth, as opposed to the polling station, should contain that information.
Can hon. Members envisage a voter going into a booth—which is usually a small, square box—and having a number of posters around him with up to 135 names on them? Would it not be simpler to have that information in the polling station, in a much more legible form than could possibly be contained in a polling booth? The Minister made the distinction between a booth and a station. I should like that to be clarified. Will he emphasise the party aspect of the electoral process rather than the candidature of the various persons?
I should also like clarification of rule 32, which relates to the candidate and/or his agent having access to the polling stations. Will the Minister explain, in simple terms, how many agents would be appropriate in a constituency, according to the legislation? Would it be one for each party, or one or more for each named person on the party list?
Rule 57 is simple: it refers to the layout of the ballot paper, and the possibility of vertical columns. At this point, however, the mind begins to boggle—the mind, that is, of the straightforward, honest-to-God voter coming in to put an X on the ballot paper. Throughout his voting life, he has been used to reading a list and then putting an X against the name of the appropriate person or place. Now he is to be confronted unexpectedly and, I think, unnecessarily—that is my point—with a columnar ballot paper. That may be all right for the sophisticated, but I do not think that it is all right for many people who make a great effort, and a great sacrifice, to go to the polls and do their best according to their conscience. I ask the Minister to reconsider. Such complexity should not be brought into play, especially in constituencies in which only five or six parties, not 30 or 31, will participate.
Page 24 of the order deals with amendments to section 7 of the Elections (Northern Ireland) Act 1985. Much is made of the requirements of postal votes; there are a good many minor amendments. Let me tell the Minister that, even at this early stage—perhaps in anticipation of the

order—applications are being made for postal votes in cases of absence and sickness, and votes by proxy, on the basis of the existing format of the forms. The Minister is now changing that format unnecessarily. Will the changing of the word "the" to "a", or the other way round, invalidate applications that have already been made, or, indeed, invalidate the electoral officer's entire stock of application forms?
The important aspect of the elections is the simplification of the apparent over-complication of the 1985 Act. As I have said, the act of voting is straightforward: it involves putting an X on a piece of paper. We must be careful not to confuse the voter unnecessarily. There must be a balance between full information, presented clearly and well, and information presented in such a complicated form that it makes it difficult or impossible for the ordinary man, woman or youth to vote logically.

Rev. Martin Smyth: The hon. Gentleman referred to applications for postal votes. People throughout Northern Ireland have already received letters about that. Could not the ambiguity that is obviously not apparent in electoral offices—where people have been told that they cannot take copies of the original forms—lead to confusion in the minds of others? If applications are turned down now, a person receiving another application form may wonder what is going on, and perhaps forget to send it back.

Mr. McGrady: The hon. Gentleman has made my point about postal votes rather better than I did. Applications have already been made, and the attitude of the chief electoral officer is that no one can make an application without obtaining an application form from him. According to the legislation, that is entirely incorrect.

Mr. Ancram: This is an important point. The chief electoral officer will accept the information needed for a postal vote application and is not worried about the form.

Mr. McGrady: I thank the Minister for that important clarification, which will be welcome to the activists on the ground in Northern Ireland who are already engaged in the election.

Rev. Martin Smyth: We appreciate the guidance that the Minister has just given, but can he assure us that the officials in the various electoral offices have been given that information, because no later than this morning they were saying something entirely different? It is important that there is consistency among the electoral offices.

Mr. McGrady: I thank the hon. Gentleman for his intervention. Unfortunately, it is not within my power to reply on the Minister's behalf—as yet. No doubt I shall be glad to do so at some future venue on some future date.
The issue of identification was raised on Third Reading of the Northern Ireland (Entry to Negotiations, etc) Bill in the small hours of last Wednesday morning. We attached importance to the problem of impersonation, particularly in certain areas. In response to a colleague, my hon. Friend the Member for Belfast, West (Dr. Hendron), the Minister suggested that he would give further consideration to the subject of the eradication of


impersonation—multiple impersonations. When he winds up, will the Minister address that problem?
We must all admit that this is an unsatisfactory way in which to deal with the situation. But we shall all do our best to run with it because the prize is beyond price. If the negotiating talks take place on 10 June, the prize of peace and stability in Northern Ireland will be worth all the heartbreak, despair and annoyance that we have suffered over the electoral process. My party would like to give it as fair a wind as possible, to enable the people to be represented—in the broadest sense—at that negotiating table.

Mr. Peter Robinson: I can certainly follow from where the hon. Member for South Down (Mr. McGrady) left off in terms of saying that the provision is unsatisfactory. The hon. Gentleman considerably understates the case—the measure is a grotesque affront to the democratic process; it is a contempt of the House; it is a most disgraceful way for a Government to behave. If one was looking for an example of bad practice, the Minister of State, Northern Ireland Office has provided it with the legislation.
I listened to the hon. Member for Clydebank and Milngavie (Mr. Worthington), who spoke on behalf of the official Opposition. He suggested that he first laid eyes on the legislation some time on Monday afternoon. He is one of the less favoured ones—some people saw it before then. Would the Minister like to intervene and give us the full list of those he favoured with a draft copy of the legislation last week? Did he send it to the leader of the Provisional IRA-Sinn Fein organisation? Did he send it to the loyalist paramilitary organisations of the Progressive Unionist party and the Ulster Democratic party? Did he send it to other parties that are not represented in the House?

Mr. Ancram: It is important to make it clear that, in light of the short time scale, I thought that it was proper that the party leaders of Northern Ireland parties represented in the House should have an advance copy of what was then an incomplete draft—those who received it know that it contained some hieroglyphics. Copies were sent to the party leaders of all parties from Northern Ireland represented in the House, including the leader of the Democratic Unionist party, the hon. Member for Redcar (Ms Mowlam), who speaks for the Opposition on the subject, and the Liberal spokesman.

Mr. Robinson: The Minister confirms that a draft was available last week and that he was prepared to ignore the existence of hon. Members who represent Northern Ireland constituencies in this House by refusing to make it available upon request—even when hon. Members said that they would be leading for their parties in the debate.
We are supposed to have an intelligent debate about a complex measure at short notice. It was made clear to the Minister that, although he had sent a copy to my hon. Friend the Member for North Antrim (Rev. I. Paisley), I would not see my hon. Friend before I left for the United States. Therefore, I sought a copy before I left the country and the Minister refused to allow his staff to fax one to me. I did not receive a copy of the measure before today, so any remarks that I make tonight have the degree of preciseness that one would expect to gain from a cursory glance at 30 pages of legislation.
The legislation cannot be read in isolation. One must refer to a stack of other legislation, as each part of the schedule refers to a section or a clause from some other legislation. When I sought to obtain the associated legislation from the Vote Office today, I was told that it was not available to hon. Members. I had to go to great lengths to secure it.
The hon. Member for South Down described the election as an unnecessary creation of the Unionist parties. Of course, political parties do not need to hold an election in order to sit down and participate in negotiations. If constitutional parties in Northern Ireland had wanted to engage in negotiations, they could have done so. But that is not what is proposed by this process. The hon. Gentleman hopes that those who are not members of constitutional political parties and those who do not have an electoral mandate will be brought into the process. Clearly, if people have no electoral mandate, there is no justification for their presence, other than allowing them an opportunity to secure such a mandate. At least the election gives people that opportunity.
The scrutiny of the measure is limited not only by the short period that hon. Members may debate it in this House, but by the type of debate that we are having. We are considering it as an Order in Council on a "take it or leave it" basis. Of course, we know that it is the latter as the Government will trundle the measure through the House as they did with the rest of the legislation—without any opportunity to put forward amendments or to test the validity of the many complex issues in this instrument.
I do not share the faith that the Minister and some other hon. Members have in our broadcasting media. I do not believe that the broadcasting media will make valiant efforts to be fair-minded, balanced and even-handed in reporting the election. If they do, it will be the first time without a legislative requirement. Hon. Members know that the media will undoubtedly allow representatives of the IRA to appear on programmes with those of other political parties as though the IRA were a normal political party. While the Government will not sit down with the Provisional IRA, because of the legislation, parties in Northern Ireland will be required either to sit down with the IRA or to opt out of the opportunity of speaking on television programmes.

Mr. William Ross: The mere fact that the Government do not appear to sit down with the IRA does not prevent them from sending other members of their party to do it for them.

Mr. Robinson: No.—particularly when it is someone who has flown kites for the Government on a number of issues. I shall not test your patience, Madam Deputy Speaker, by going off at a tangent on that issue; however, many people may consider that the Government had greater knowledge of such contacts than they would like people to believe.

Mr. Roy Beggs: I am sure that the hon. Gentleman will agree that there will be a greater demand for engraved watches in the near future.

Mr. Robinson: Yes—no matter what the inscription may be.
To be honest with the hon. Member for Clydebank and Milngavie, there is no reason why political parties will find it difficult to operate within the limits that are laid down in the order. Indeed, when the system is applied to the whole of Northern Ireland, costs will be reduced considerably as the larger political parties will send out the same literature in South Down, North Down and other constituencies unless, as the Ulster Unionists appear to do, they want to concentrate on local candidates. However, there is absolutely no reason why there should not be considerable savings on printing costs, which are a major expense in an election campaign.
I have no difficulty with the amounts that are specified, but nor will any political party that wants to go beyond those limits. Provided that they hire the right lawyer, they will be able spend whatever they want. The hon. Member for Belfast, West (Dr. Hendron) has already raced a coach and horses through that legislation. Anyone who feels that the figures are a wee bit tight should not be too concerned. They will simply have to spend an extra few thousand pounds on a proper defence thereafter.
The Minister would be disappointed if I did not raise the matter of party names. As I understand the Northern Ireland (Entry to Negotiations etc.) Act and the list in schedule 1 to that Act, it states that the only parties entitled to stand in an election are those on the list. It contains no requirement—I shall be interested if the Minister can draw my attention to one—for nomination papers to refer to political parties by the names that are listed in the schedule to the Act.
I shall be interested if the Minister tells me that I am wrong, but if I am right, neither the Act nor the elections order specifies how parties should present themselves. It specifies the parties that are on the list, but it does not state that they have to present themselves under those names.
There is precedent for that. I am a member of the Ulster Democratic Unionist party. That is the official title of my party, but I have never stood as an Ulster Democratic Unionist party candidate. I have never put that name on the ballot paper. I have stood as a Democratic Unionist candidate, a DUP candidate, or even as a Democratic Unionist-DUP candidate, but I have never stood as an Ulster Democratic Unionist party candidate.
Under past procedures, there was never a requirement to put alongside my name on the nomination form the official name of my party. Nor do I see in the election order any requirement for me to specify my party in the terms that it is in the schedule to the entries and negotiations measure. Again I look to the Minister for advice, as he may be aware that this matter is likely to be tested.
If parties are not prepared to stand for election under names other than the ones that they present to the chief electoral officer, what powers does he have to change their names or to remove them if they are clearly the parties included in the schedule to the Act? I see no such power given to the chief electoral office in this order. The Minister therefore needs to turn his mind to the problem. He should not assume that what he says in the House becomes the law. The established law allows political parties to describe themselves in whatever form they

wish—the precedent for that is clear. If the Minister does not sort out this question, there wil be considerable difficulties with the nominating process.
It would seem, moreover, that the tossing of a coin will decide which candidates are selected in some cases. Besides the other farce of the whole system, if there is a tie for votes, the outcome will be decided—what could be fairer?—by the drawing of lots, the tossing of a coin or the drawing of straws. I do not have a clue what the Minister was thinking of, but surely he could have found a more scientifically based system. If he is short of ideas, might I suggest that the party that has contested the smallest number of constituencies should be entitled to the disputed seat? We can presume that a party with a candidate in another area might at least have received one vote—

M. William Ross: I am sorry to interrupt remarks with which I agree, but does the hon. Gentleman recall that, if there was a tie in a parliamentary election, it was decided by counting the pink ballot papers in the box?

Mr. Robinson: Yes, those are the papers given when someone has stolen his vote. That would certainly cast the whole system into considerable doubt. Another idea would be to lock the two candidates in a room and see which one came out. The Minister must have a better idea than casting lots. Imagine arriving at the forum and bumping into another delegate who stated that he was elected because he called tails. It is farcical to choose people to enter a mature forum so as to take part in serious negotiations in this way. The Government could surely have done better.
The hon. Member for South Down mentioned vertical and horizontal ballot papers. The Government have provided for something akin to a Littlewoods football coupon, on which people can choose numbers across the paper or down the paper, or across and down. I can think of nothing more likely to lead to confusion for the voter. Northern Ireland's voters have had single transferable vote elections, first-past-the-post elections and European-style elections with the whole Province involved; but they have never been faced with a ballot paper that goes across as well as down. I would not like to represent the party stuck somewhere in the middle of the paper, rather than at the top left or top right. A distinct advantage would be attached to the placing of a party on the paper if it were different from a standard ballot paper on which the parties are listed one below the other.
No matter how long the ballot paper—it could be the length of a toilet roll—Northern Ireland's voters have always been used to the names of the parties appearing one under the other; and the chief electoral officer would be greatly mistaken if he produced a different ballot paper that led to confusion and advantaged some parties at the expense of others.
I say that in the context of someone who has an alphabetical disadvantage. My surname starts with the letter R, and usually places me fairly close to the bottom of the list. I am never at the very top of the ballot paper, as some Members have the good fortune to be. I would rather be towards the bottom of the ballot paper, however, where there is one continuous list, than somewhere in the middle if names are to go across the page as well. I hope that the Minister will think twice and give advice to the chief electoral officer not to take that route.
We have an election that was set to meet an IRA deadline. We have a system that was rigged to ensure that certain gunmen would get to the negotiating table. We have a ballot paper that the Minister tried to determine to the advantage of some and the disadvantage of others in terms of the names that would be permitted on the ballot paper. In addition to all that, we have a system that is nothing short of a farce in its operation. The best that I can say to the Minister is that the parties in Northern Ireland will contest the election in the hope of producing a satisfactory result, not with the Government's help but in spite of the Government.

Mr. Ancram: With the leave of the House, I shall reply.
I am sorry that the hon. Member for Belfast, East (Mr. Robinson) is upset that I was not able to make available to him an early draft of the order. I felt that it was an important courtesy to allow the party leaders to have sight of an early draft. It was an exceptional step to do that. I thought that it would help. The normal procedure would have been to wait until the order was published, which was on Monday. I am sorry that what was intended to help the parties, including the party which the hon. Member for Belfast, East represents, has caused him such distress.
For all the remarks of the hon. Member for Belfast, East, the drawing of lots is a normal procedure for both parliamentary and European elections in the context in which we are discussing the order. In my experience, it has been used. It is for the returning officer to decide on the method to be used.

Mr. William Ross: What about the pink ballot papers? Is it not laid down in legislation that they are to be used as the determining factor?

Mr. Ancram: I am saying that the drawing of lots is the system used in both parliamentary and European elections. In the context of the election that we are discussing, which will involve party lists, we felt that it was the best system to use. I believe that that is the position where there is a parity of votes.

Mr. Ross: Surely the system, whatever it may be—I object to what the Minister has been saying—would apply only to the last seat and not to any of the first four.

Mr. Ancram: The context in which it is applied is in relation to the aggregating of votes. I think that that is dealt with in paragraph 6. It applies where the aggregated votes are equal. The process will be used to decide whether they are in the top 10 and, therefore, get the two top-up seats. Lots will be drawn. It is proper that that should be done in those circumstances.
Several hon. Members have talked about party names on ballot papers. The point was raised originally by the hon. Member for Clydebank and Milngavie (Mr. Worthington). It is an important matter and I would not wish there to be any misunderstanding. The Act determines how party names appear on the ballot paper. Paragraph 7(2) of part I of the schedule prescribes that the ballot paper will show the names of the relevant

parties for each constituency. I am informed that the effect of the legislation is that the names will be as set out in part II of the schedule.
As for the consequent effect of that provision, if a list is submitted in the name of a party where the designation is different, the chief electoral officer must reject that list under rule 12(2)(c) of the election rules on page 18, which refers to the breach of requirement in paragraph 6 in part I of the schedule. He could also make a rejection under paragraph 12(2)(b) on the ground
that the party is not a party listed in Part II of Schedule 1 to the 1996 Act".
I want to make this clear in case there are any efforts to produce different names. That is the effect of the legislation and the chief electoral officer will act accordingly. I hope, therefore, that there is no doubt about that, because it is an important point in terms of the way in which the elections are to be conducted. I would not want any party to find that its lists were rejected because of a misunderstanding on that point.

Mr. Worthington: This is a serious point. Both the hon. Member for Belfast, East (Mr. Robinson) and I read that and I think anyone else reading it would not draw the inference that the Minister has drawn about the naming of parties. Does that mean, that, if the Green party, instead of putting down "Green party" puts down "The Green party", or if Independent MacCaffer puts down "Independent Ignatius MacCaffer", their names will be ruled out? The law does not state what the Minister says it states.

Mr. Ancram: During the previous debates on the Northern Ireland (Entry to Negotiations, etc.) Act 1996, I have stated its intention. I have confirmed today that I am reliably informed that that is the effect of the legislation. A constituency or regional list must state the name of the party under rule 6(2)(c), on page 18 of the order. If the party is not a party listed in part II, schedule 1 of the Act, the list must be rejected under rule 12(2)(b). I make that very clear. The hon. Gentleman recognises that this is an important and serious point and I wish there to be no misunderstanding. That is why we spent some time on the issue during the passage of the legislation.

Mr. Peter Robinson: Will the Minister give way?

Mr. Ancram: I give way, but it is at the expense of being able to answer other questions.

Mr. Robinson: The Minister and a court could not judge that the "Democratic Unionist party (DUP—Rev. Ian Paisley) " is not the same party as the one in the schedule. We are talking not about whether the party is the same, but how it will be described on the ballot paper. Nothing in the legislation would disallow the party from putting down the name that it chooses.

Mr. Ancram: All I can say is that I have made clear what I understand to be the legislation's effect and what I am reliably informed is the effect. I hope that that is clear to all the people who will be submitting party lists for the election.
A number of other points were raised. Obviously, in the time available, I will not be able to cover them all. On broadcasting, section 93 of the Act deals with


broadcasting related to constituencies or electoral areas. In this election, as with a general election, broadcasters must ensure that their coverage of the campaign generally—national or regional—reflects their obligation for balanced and fair coverage. It is only the difficulty of distinguishing constituency coverage in this election that has led us to decide not to apply section 93. It is sensible in that context.
A number of questions were raised in relation to election expenses. Of course, normally, limits apply to candidates and not parties, but this election creates unique circumstances. We saw no reason why the principle of limits should not apply to this election too. It is fair to say that we should agree that the principle of limiting expenditure is a fundamental part of our democracy.
We wanted to retain the limits for the election, but we decided to apply them on an aggregate basis to the parties contesting the election. The current limits apply for candidates in a constituency at a parliamentary election. Those will apply to a party in a constituency and, if a party chooses to contest six constituencies, it will have six times the limit.
As I have said, we envisage that the spending will not be necessarily tied to any particular constituency, which is why we have made provision for an aggregate limit. That limit allows for more flexibility and means that there will not be parties that, because they have vast resources outside, can exceed those limits. Generally, we have come to a balanced view in terms of the legislation.
I say to the hon. Member for East Londonderry (Mr. Ross) that I realise that this is complex legislation. I noted what he said about the order, but the procedure is not unusual. The Representation of the People (Northern Ireland) Regulations 1986 for the European Parliamentary elections were produced in exactly the same format as the order. As I say, it is a complicated matter, but, if the hon Gentleman goes through the measure as I have done, he will find that many of the provisions suggest no modifications and that much of the existing electoral law with which the hon. Gentleman is as familiar as I am, will still apply. I hope that in practice the outcome will not be as complex as he thinks. I ask the House to approve the order.

Question put and agreed to.

Resolved,
That the draft Elections (Northern Ireland) Order 1996, which was laid before this House on 29th April, be approved.

Orders of the Day — Northern Ireland (Deregulation and Contracting Out)

The Minister of State, Northern Ireland Office (Sir John Wheeler): I beg to move,
That the draft Deregulation and Contracting Out (Northern Ireland) Order 1996, which was laid before this House on 7th March, be approved.
The order has two clear objectives: to introduce deregulatory measures that will remove burdens on business, and to remove statutory obstacles to contracting out. In so doing, the order follows and builds on the general thrust of the Deregulation and Contracting Out Act 1994. In Northern Ireland, we have already launched a programme of deregulation and contracting out. Much has been achieved and much more can be achieved. I shall later touch on that.
The Government have sought to release British business from the shackles of unnecessary rules and regulations. Our aim is to work towards fewer, better and simpler regulations—both new and existing. Small firms in particular stand to benefit from such moves. Excessive paperwork and unjustified interference burden and harm management, taking it away from running businesses. It costs managers time and money and stops them employing people. Surveys carried out in Northern Ireland by the Northern Ireland Small Business Institute have identified regulations and associated paperwork as ranking among the top four problems facing small business.
The Government's competing for quality policy is focused on improving the quality and value for money of our public services. Contracting out is a keystone of that policy, but there are some areas of Government business where the opportunity to test whether a function can be done more efficiently or effectively is being denied by some small but significant legal obstacles.
The order will bring an element of consistency between Northern Ireland and Great Britain. Its measures are reasonable and sensible, and the evidence of that is the small but valuable response to our consultation exercise, which was open to all members of the public. Comments were specifically invited from 300 individuals or bodies with a particular interest in the order and 18 responses were received. Each was carefully considered and individually addressed, but no amendments were considered necessary.
I thank hon. Members for their written comments. In particular, I am grateful to the hon. and learned Member for North Down (Mr. McCartney) for his correspondence on the handling of Northern Ireland legislation. I trust that, from the responses that he has received from my noble Friend Baroness Denton, he appreciates that his comments have been given lengthy and careful consideration. I shall later draw attention to our stance on the use of enabling powers in the order.
The House may find it helpful if I deal with the subjects in the measure in the order in which they arise, starting with deregulation. As I said earlier, good progress is being made. Through the deregulation initiative, businesses in Northern Ireland and throughout the United Kingdom are already benefiting. For example, 500,000 of the smallest businesses no longer need to have their accounts audited.
Taxation and national insurance systems are being streamlined—one important example is that there is now a single point of registration for VAT, national insurance contributions and pay-as-you-earn. Some 30 sets of health and safety regulations have been repealed as part of a programme to cut the rulebook by 40 per cent.
I know that the deregulation policy may give rise to some misapprehensions, so I emphasise that deregulation does not mean the reduction or removal of necessary safeguards. Our priority is always the proper protection of the public interest. Building on the 13 specific deregulatory changes benefiting businesses in both Great Britain and Northern Ireland in the 1994 Act, the order adds a further six deregulation provisions that will be of particular benefit to Northern Ireland business.
Three articles introduce further deregulatory change to Northern Ireland legislation in line with the 1994 Act or deregulation orders made under it. Article 4 removes statutory constraints on measuring a pint of beer. The Government believe that the consumer is quite able to determine what a pint of beer is. Article 6 removes restrictions on Sunday sporting activities. Article 7 removes constraints on totaliser operators in relation to deductions from stakes. That provision follows a Great Britain order made under the 1994 Act's enabling powers.
The remaining three provisions are unique to Northern Ireland. Article 3 removes the requirement to license premises used for horticultural processing. Article 5 removes redundant controls on local auctions. Article 8 removes the requirement for taxi drivers to sit a separate driving test to obtain a taxi driver's licence, while safety continues to be assured through the good conduct and character check tests.
The other side of the matter is how the measures are to be enforced. Businesses complain that they often incur unnecessary costs to meet the demands of overzealous enforcement officers. They also suggest that they should be able to challenge enforcement officers' decisions at an early stage and that when a formal decision has been made, their rights of appeal should be clarified and the appeal procedure should be speedy and inexpensive. The Government recognise those concerns. We believe in ensuring that the manner of enforcement is as fair, transparent and consistent as possible. That is stated in article 9.
Article 10 sets out powers to introduce model appeal provisions that will provide a clear procedure to help businesses to appeal enforcement decisions.

Mr. Anthony Steen: I am listening to my right hon. Friend with considerable interest because this is a matter of great importance to Conservative Members. In England, when we dealt with appeals, several Conservative Members suggested a local mechanism using the magistrates courts, so that, if an over-zealous official, as in the Lanarkshire blue cheese case in Scotland, got it wrong, the case would not to go on and on through various appeal courts but be dealt with locally by the local magistrates. Is he aware that, although the matter was raised two years ago, it has not been resolved and that the Minister responsible in England has proposed a statutory instrument that is no more than a discussion document on whether the appeal system should be local or national? Could he assure the House that in

Northern Ireland, we will not go down the same bureaucratic road where nothing happens except talk about local appeal mechanisms?

Sir John Wheeler: I am grateful to my hon. Friend. He is something of a renowned expert in such matters and devotes a good deal of his remarkable zeal and energy in testing out such procedures and assumptions. I am not personally familiar with the Lanarkshire blue cheese case, and as far as I know, we do not have a similar problem in Northern Ireland. I think that I can assure him, however, that the procedures that I hope that we shall be pursuing in Northern Ireland will entirely fulfil his expectations of expedition and simplicity. That is perhaps one of the benefits of Northern Ireland being able to pursue its own administrative arrangements in the way that I am describing.
The other part of the order relates to contracting out. Contracting out is a major component of the Government's policy on competing for quality. The policy is set out in the White Paper "Competing for Quality", which was published in 1991 as a companion document to the citizens charter White Paper. Together, those important policy documents had a single aim: the safeguarding and improvement of our public services, for the benefit of the people who use them, at a cost which the taxpayer can afford.
The competing for quality programme has been the main driving force in delivering the very real benefits of competition within government. The evidence is clear. In just three years, from 1992 to 1995, of a total of £2.6 billion of UK activities reviewed, annual cost savings of £540 million were found. In Northern Ireland, £58 million-worth of services have been reviewed, achieving total savings of about £9 million a year. That is a substantial achievement, yet savings have not led to poorer service or lower quality—quite the reverse. Users have benefited from higher quality, backed by specific contract conditions and innovation in the way in which services are delivered. The savings produced are re-channelled, either to enhance services for the same spend or to provide more services overall.
One example of the benefits to be had from competition can be found in the contracting out of the computer bureau service that the Department of Finance and Personnel provided to Northern Ireland Departments. The value of the service was £6.25 million, and £1.77 million-worth of savings were produced a year.
Another example is the Department of Agriculture's market testing of an inspection service related to the payment of subsidies. The market test was won in-house, making savings of more than £250,000 in 1995–96 from a total service cost of £1.3 million—a saving of a little more than 22 per cent.
With so much to gain, it is important not to let the on-going process of opening up competition be obstructed by unnecessary statutory obstacles. The order does not impose contracting out, it merely allows it. It will be up to central Departments, district councils and non-departmental public bodies to choose whether to use the freedom that the order provides to enable contracting out to take place. I would welcome a move to competition, and I feel that the public bodies concerned will wish to do so in their own interest and those of the taxpayer, but the order will enable, not compel.
Measures in the order such as articles 11 and 12 are simply common-sense amendments. They enable the Official Receiver and Registrar of Companies to delegate functions to their own staff, in so far as they do not already have power to do so. They will also enable the registrar and the Official Receiver to contract out certain functions, such as the incorporation of companies, receipt of company documents and statements of affairs in cases of bankruptcy and insolvency.
The provisions in articles 13 to 15 deal with the important areas of accountability and contract conditions and make it clear that the accountability of Ministers is not diminished if a service is contracted out. Nor will contracting out affect the responsibilities of office holders or Departments in relation to services affected by the order. It is the work that is delegated, not the responsibility.
Confidentiality is also a matter about which concern has been expressed about the contracting-out process. Article 16 gives effect to schedule 4, which contains provisions modifying certain restrictions on the disclosure of information to contractors. The measures provide that restricted information may be disclosed to authorised contractors where this is necessary to enable the contract to be performed. They also ensure that contractors are subject to the same safeguards and sanctions in relation to confidentiality as is the contracting body.
Article 18 and schedule 5 of the order remove specific statutory obstacles in relation to the agricultural census and dog control services provided by district councils and the administration—but not adjudication of entitlement—to housing benefit. Most of those reforms follow the practice in Great Britain, but there are two departures in the order from the approach taken in the 1994 Act, the first on the Sunday betting provisions. Those provisions were subject to an extensive public consultation exercise, and the results showed that a substantial body of public opinion in Northern Ireland was opposed to any relaxation of the present legal position. The Government have listened, and a policy decision has been made not to include the provisions in the order.
Secondly—this is the enabling powers issue to which I referred earlier—the Government have decided not to include a general order-making power similar to the 1994 Act. We have taken into account the legislative implications and potential loss of parliamentary scrutiny. Such a general power would have enabled Northern Ireland Orders in Council to be amended by subordinate legislation without reference to Parliament, where the aim is to effect deregulatory change or to remove an obstacle to contracting out.
That situation would have been substantially at odds with that in Great Britain, where an effective system of parliamentary checks has been put in place. Again, we have listened to concerns and responded by making it the rule not to include a general order-making power. Hon Members will be right to surmise that every rule has exceptions, and article 17 is that exception. This refers to a special order-making power for social security legislation alone. Its inclusion recognises the need—out of fairness—to provide for parity of treatment for social security provision between Great Britain and Northern Ireland.
Not to include such a provision would delay the start of Northern Ireland businesses enjoying the benefits enjoyed by their Great Britain counterparts in an area where it is policy and practice that concurrent action is the norm. In addition, without the power, should changes be introduced under the order-making powers in the 1994 Act which impact on claimants, differential treatment for Great Britain and Northern Ireland claimants could result.
In conclusion, the Government believe the order to be sensible and reasonable. Its intention is to add to the considerable progress already made in the UK and to remove obstacles within Northern Ireland that stand in the way of the proven benefits of deregulation and contracting out. The order is entirely consistent with the Government's on-going desire to reduce the regulatory burden on business, to enable our companies to compete more effectively and to help boost economic prosperity to the benefit of all the people of Great Britain and Northern Ireland.
I commend the order to the House.

Mr. Jim Dowd: As the Minister said, large parts of the order replicate for Northern Ireland much, although by no means all, of the parallel legislation for the rest of Great Britain, the Deregulation and Contracting Out Act 1994. The objections that the Opposition raised to that legislation still apply.
When the then President of the Board of Trade, the right hon. Member for Henley (Mr. Heseltine), introduced that measure, he said:
No advanced society can manage itself outside a regulatory framework. Indeed, it is impossible to contemplate the sophisticated assumptions on which we conduct our everyday lives without the underpinning of regulation."—[Official Report, 8 February 1994; Vol. 237, c. 147.]
We agree with that.
Furthermore, we would go on to say that regulation, of itself, is neither good nor bad. It has no intrinsic merit and it is not necessarily harmful. Regulations have to be effective and responsive. There are good and bad regulations. When it comes to the burden of regulation, the Government certainly know how to regulate, but they seem to be unable to tell the difference between good and poor regulation.
The cost of dogmatic deregulation can, most topically, be clearly seen in the case of the deregulation of the rendering and animal feed industry. That has led directly to the spread of scrapie and bovine spongiform encephalopathy, with potential consequences for human health because of the link to Creutzfeldt-Jakob disease, putting lives and an entire industry at risk, with who knows what cost to the taxpayer.

Mr. Roy Beggs: Does the hon. Gentleman agree that this is not the time for the Government to be considering contracting out tuberculin testing, which has traditionally been carried out by veterinary surgeons? Does he further agree that consumer confidence throughout the United Kingdom, which must be built up, is very much dependent on tuberculin testing being carried out by qualified veterinary surgeons, not contracted out to lay persons?

Mr. Dowd: I share the hon. Gentleman's concern in large measure. We have recently seen the difficulties that


the Government and the Ministry of Agriculture, Fisheries and Food have run into with our European partners because their yardstick of what are reasonable actions do not correspond with that of our partners. That has led to our current difficulties. That impacts on the Government's approach to many things. They approach things in a dogmatic fashion and are pulled up short only by events and experience.
As far back as June 1989, the Government's consultative committee on research into spongiform encephalopathy, the Tyrrell committee, published a report which called for a survey of the brains of cattle routinely sent for slaughter in order to monitor the incidence of unrecognised infections. Despite repeated calls from the Opposition, the Government have ignored the advice of their scientists.
The Government also rejected Labour amendments to the Criminal Justice and Public Order Act 1994 for the banning of advertisements for dangerous knives and weapons for which there is no conceivable legitimate use. They did so on the ground that the Advertising Standards Authority had power to deal with the problem.
When my hon. Friend the Member for Blackburn (Mr. Straw), the shadow Home Secretary, brought to the attention of the ASA some specific advertisements for horrific weapons such as the Rambo short sword and the SAS shoulder holster knife, the chairman of the ASA, Lord Rodgers, stated that the authority had no powers to ban such advertising. The Government's reliance on that secondary measure was proved to be not only ill founded but completely untrue.
The Children Act 1989 stipulated the need to ensure that all those providing out-of-school activities were registered. This impacts on what I said earlier to the hon. Member for East Antrim (Mr. Beggs) about the Government's efforts being overtaken by events. The Government were right to introduce such a measure then and to relax the regulations covering the vetting of staff working with children in playgroups and other similar out-of-school activities would be little more than a perverts charter. Parents throughout the country would be horrified that the Government were even thinking of removing that protection from their young children. It was only the recent tragic and desperately horrific events in Dunblane that prompted that reconsideration of the Government's proposals.
The Minister mentioned removing the burden on business. In 1979, "Butterworth's Company Law", the almanac of company law, consisted of just under 500 pages. Its annexe described 80 different forms that a company may be called upon to fill in. The most recent edition of that textbook—I believe that the print size is identical—runs to more than 4,000 pages and the annexe contains 265 different forms that a company may be called upon to fill in.
To confirm the difficulties that small firms have over filling in too many forms, there is the example of a service sector firm with 25 employees which responded to the Association of British Chambers of Commerce small firms survey and said:
Please can we have less paper/form filling/regulations! We have been in business since 1982 and the amount of time taken out of management time to reply to letters/forms etc. has probably quadrupled.
I draw the attention of the House to the fact that the Conservative party has been in office throughout that firm's lifetime. The quadrupling of time and effort put

into meeting regulations has taken place entirely under this Government. That helps us to learn much more about the Government's approach to deregulation. They have been responsible for much of the regulatory burden placed on small businesses.
The Department of Trade and Industry's deregulation task force identified 3,500 regulations that could do with significant amendment or abolition. More than 70 per cent. of those have been introduced since the Conservative party took office. This measure is truly a cure for a disease that is largely of the Government's making. There is a clear inability to recognise regulations that need to be lifted and those that are required, as the right hon. Member for Henley, then the President of the Board of Trade said, for our "advanced society".
The Government have made great play of how the private finance initiative will come to the aid of the public purse. The biggest potential area for partnerships between the public and private sectors is in local government. To be sure about the legality of deals with local authorities, potential private sector partners have to seek legal advice on parts IV and V of the Local Government and Housing Act 1989, 17 different sets of regulations and orders dealing the local authority capital finance and local authority companies and 15 sets of regulations dealing with the detail of capital finance. It is no surprise that the private finance initiative is languishing in such a manner.
Small firms have grappled with the uniform business rating system. Many firms thought that the idea of a uniform rate was a good one, but they have been put off by the system that the Government have created. Current legislation is contained in two statutes and 140 statutory instruments, many of them amending pre-existing regulations. Steve Cherry, British Telecom's head of rating and valuation, who represents the Confederation of British Industry on the Royal Institution of Chartered Surveyors national committee, said:
The rate demand on a property used to be easy to understand…The business community wishes to see a system which is clearer to operate.
The Government have responded by blaming Brussels for the increase, certainly in recent years, in the amount of regulation going on to the statute book. In fact, fewer regulations come from Brussels than come from Whitehall.
The Internal Market Commissioner, Mr. Bangemann, has singled out the United Kingdom for being over-zealous in adopting too many national regulations to implement the single market programme. The Republic of Ireland has felt it necessary to enact only six pieces of legislation to enforce 415 European laws, while the United Kingdom has felt it necessary to enact 235 pieces of legislation. The Institute of Directors has called this process gold plating.
In March, a dairy farmer in Hampshire was forced to close because he could not afford to install new bottling equipment to meet the requirements of the 1992 European directive on dairy products. However, the Commission disclaimed all responsibility by pointing out that the law in question allowed the member state flexibility when interpreting the directive. Neither the local authority nor the Ministry of Agriculture, will take the blame.

Mr. Steen: The hon. Gentleman is quite right to question the principle of gold plating. The Government


have recognised that officials, quite wrongly, have added to directives from Brussels to pander to their own interests and for convenience. The Government are now acting on that. I shall tell the hon. Gentleman something about which he will be much more concerned—

Madam Deputy Speaker (Dame Janet Fookes): Order. The hon. Gentleman will have to tell the House later, as his intervention is too long.

Mr. Steen: With respect, I am just getting to the point that I want to raise.

Madam Deputy Speaker: I am sorry, but the hon. Gentleman has passed the point.

Mr. Steen: On a point of order, Madam Deputy Speaker. I had merely introduced my question with a statement. I was about to come to my question. With respect, my introduction was only three or four sentences long. I ask to be able to complete my question.

Madam Deputy Speaker: The hon. Gentleman cannot complete his question. He obviously needs to make his point in a speech. Interventions, by their nature, should be short.

Mr. Dowd: I will not respond to the hon. Member for South Hams (Mr. Steen), except to say that I believe that the Procedure Select Committee is looking at the changes that are needed in this regard. At the moment, we have the odd spectacle where the Ministry is claiming one thing but permitting an entirely different thing. Clearly, there would be worries for Northern Ireland legislation in the same way.

Mr. Steen: Does the hon. Gentleman agree that the problem with Europe is not so much the directives as the way that rules get around the European Parliament and the Council of Ministers? Up to 4,000 rules are coming into Britain and are being put into law without Parliament even seeing them.

Mr. Dowd: There is a problem, but, as I outlined earlier when contrasting the approach of the Government of the Republic of Ireland with our Government, Britain is developing a reputation for being the most officious in the way that it introduces many of the changes that our European partners have no difficulty in accommodating. I refer to the recent example of the change to metric weights for foodstuffs. The European regulation became more complicated than it actually was because of the way in which Whitehall interpreted it. I shall make a few more points before I—

Madam Deputy Speaker: Order. I hope that the points of the hon. Gentleman relate to the order. He seems to be straying.

Mr. Dowd: The Minister outlined the general purpose of deregulatory legislation, and I am merely picking up on his points.
The deregulatory measures are a curious assortment of makeweights. Of the six that are mentioned by name, three were introduced by this Government; one was introduced

by a previous Conservative Government in 1957; one was introduced by a Labour Government; and one was introduced in 1695—I do not know which Government were in power then.
I refer to the horticultural produce provisions that state that the Food Safety (Northern Ireland) Order 1991 can safely deal with this issue. When that order was advanced in 1991, why was the relevant section of the horticultural produce provisions not repealed at the same time if it was performing the same purpose? The Weights and Measures (Northern Ireland) Order 1981 allows brewers to get their pay-off. I have seen figures that show that it would cost an additional '7p to ensure that all customers get a full pint—which is, after all, what they order. Whether we believe that or not, if it is taken at face value it suggests that the brewers are currently conning every customer in the pub out of 7p for each pint that is sold.
I draw the Minister's attention to the proposal for review of the Repeal of Auctions (Local Control) Act (Northern Ireland) 1957. He will know—especially in his capacity as a constituency Member—that Westminster in particular and, to a lesser extent, Camden have had considerable difficulties with bogus auctions in and around the Oxford street area. Members of the public, particularly tourists, are being rooked right, left and centre, and local trading standards officers believe that the current legislation is inadequate for them to protect visitors and residents.
Article 9 of the order provides for a considerable extension of powers. The Minister sought to downplay that, saying that it related merely to the enforcement regime, but article 9 extends powers not just to Ministers but to Departments. Elsewhere in the order, a Department is defined as
the Head of such a Department".
Powers are being transferred to civil servants as well as to Ministers.
The Minister said that the arrangements were different from the legislation in Great Britain. Legislation governing the rest of the United Kingdom provides that before any deregulation order is made, the Minister must
consult such organisations as appear to him to be representative of interests substantially affected by his proposals".
There is no equivalent in the order, although, as it contains deregulatory measures, I imagine that taxi drivers, for example, must have been consulted. I hope that the Minister will tell us whether those consultations will continue, or will take place if they have not yet occurred.
Article 10 explains how the provisions with respect of appeals will be prescribed. This relates to points made by other hon. Members. I seek an assurance that the provisions will not be used to undermine either employment protection or equality legislation—I shall return to that shortly. The part of the order dealing with contracting out is resented and opposed—or, at least, its implications are opposed—by many people throughout Northern Ireland. I admit that the Minister said that this was enabling legislation that would not necessarily make the arrangements compulsory, but I suspect that everyone realises that contracting out and the privatisation of many of the functions concerned will follow as night follows day.
The order also has implications for fair employment, policy appraisal and fair treatment guidelines and, in particular, women's employment. The background is


significantly different from the background to regulations in Great Britain. The Minister will be aware of a report by the Equal Opportunities Commission for Northern Ireland, which highlighted the disproportionately disadvantageous effect that contracting out in the health and education boards has had on female employment in particular. So disproportionate has that effect been that the commission called for the whole process of contracting out and privatisation to be suspended until the problem had been properly dealt with.
We are told:
It is difficult to see how compulsory competitive tendering could have been introduced in the way it was if a PAFT"—
policy appraisal and fair treatment—
analysis had been made of its potential impact. PAFT offers us a way by which government departments can work together with different constituencies at community level to assess policies and ensure that they will undermine rather than compound inequalities in the labour market.
Government activity is now clearly aimed at regulations, the bulk of which they have introduced themselves. That has not gone unnoticed in Northern Ireland, as elsewhere. I was intrigued to note that, at a recent dinner, Mr. Howard Hastings, the chairman of the Northern Ireland division of the Institute of Directors, slammed the contracting out of public sector services. I believe that the Minister's colleague, Baroness Denton, was present at the dinner when Mr. Hastings criticised the Department's performance, and said:
Unfortunately, ministers cannot treat policies like Pepsi Cola, for changing the colour of the can will not make unworkable policies any more palatable…The public sector has been subjected to everything from Next-Steps Agencies to devolution and delayering…We have now reached the point in some agencies where the logo has become the more important than the logic.
As the Government continue their pursuit of the structure of a minimalist state, we see them repeating the "Animal Farm" mantra of "Public sector bad; private sector good". They should demonstrate an objective commitment to improving public services, not an insensitive ideological determination to undermine them, which the order represents.

Mr. William Ross: We come to the second order of the evening, in which we have some interest, not least because, on 21 January 1994, my right hon. Friend the Member for Lagan Valley (Sir J. Molyneaux), speaking in a debate, said:
We must not be stalled by those who decline to move with the times. We should not ignore the stimulus contained in this week's Deregulation and Contracting Out Bill, which applies to Northern Ireland and bears the name of the Secretary of State. The powers to repeal and amend in the first four clauses could provide a solid launching pad for a campaign to open doors and gates that have remained closed for far too long."—[Official Report, 21 January 1994; Vol. 235, c. 1165.]
The Bill applies to Northern Ireland, but we find ourselves, two years later, removing some obstacles to the Bill's full implementation that should surely have been noticed and dealt with in the schedules to the original Bill. I hope that the Minister of State, Northern Ireland Office, who is to reply to the debate, will explain why it is necessary to deal with the matters in this way, and why it has taken two full years to catch up with the situation in the rest of the United Kingdom.
I have with me the 13 reports of the Select Committee on Deregulation, of which I am a member. I can also say for the second time this evening that I am also a member of the Joint Committee on Statutory Instruments. The Chairman of the Deregulation Committee, the hon. Member for Isle of Wight (Mr. Field), has written a number of letters to various Ministers asking why Northern Ireland was not included whenever something was deregulated. There is no good reason why that should not be so. I have raised that point several times during meetings of the Committee, and I have not been given a totally satisfactory answer.
We have been told on the Floor of the House over the years that it was necessary in order to preserve the Northern Ireland statute book. We have been told that it was necessary because the Northern Ireland statute book had to be preserved intact for the day when there would be a parliamentary legislative structure in Northern Ireland.
As that dream slowly fades, the Government should step closer to the real world and recognise the changes that have overtaken the issue of a devolved administrative structure for Northern Ireland over the past 25 years. They should not be so anxious to preserve that statute book; it could simply be brought back into being if a future legislative Assembly, should it ever come into existence, wished to do so.
I believe that it is not necessary, for that reason. I believe also that the sort of delay represented by this order will be a hindrance to Northern Ireland and will keep it lagging behind Great Britain—not only in terms of the measures mentioned this evening, but in other areas also. If would often be easy to include Northern Ireland in the deregulation orders affecting the rest of the United Kingdom.

Rev. Martin Smyth: Does my hon. Friend accept that most people in Northern Ireland agree with his argument—particularly about measures that improve the quality of life? However, there are those who would question whether we should always rush along the materialistic road down which the Government have taken us at times. We want to uphold some spiritual values in Northern Ireland, rather than joining the Gadarene swine.

Mr. Ross: I accept that my hon. Friend speaks from a theological position, but I ask him to be an evangelist in this instance. We should try to export to the rest of the United Kingdom the spiritual values that we in the Province hold dear. It would not be the first time that evangelists from the island of Ireland have converted the English. We shall try our best to do so again if we are given the opportunity.
Despite my hon. Friend's comments, I am in favour of keeping Northern Ireland in line with Great Britain. We should determine a United Kingdom position, which hopefully embodies the spiritual values of Northern Ireland. I hope that that will become general practice—it will certainly save the time of the House in many instances.
We must remember that all the items being deregulated this evening were included in the legislation that created them for a very good reason. In other words, they were created in order to avoid or to prevent an evil consequence or to correct an existing evil. Whenever we consider deregulation of any sort, we should ask ourselves why the original evil that we intended to avoid is now redundant.
That is the point of the Deregulation Committee. Hon. Members from all major political parties are represented on the Committee, and they probe, ask questions, request information and examine witnesses. Before anything is deregulated, it is explored more thoroughly in that Committee than is possible in a debate such as this, when several items are being dealt with together. I hope that the Minister will take my comments on board, and examine how we can integrate our deregulation procedures with those of the United Kingdom and the House as a whole.
We are told that the Horticulture Act (Northern Ireland) 1966 was chosen for deregulation because it has been overtaken by other legislation. But surely those who framed that legislation—which is also listed—could have repealed the Act at that time. In other words, there was a slip-up, and the Act was passed over. That should not happen.
We are told that article 4, which refers to the gas in foam on beer, brings Northern Ireland into line with Great Britain. There has been a row about that in the Common Market, but we now seem to have reached a fairly sensible conclusion.
Article 5 refers to the Auctions (Local Control) Act (Northern Ireland) 1957. The hon. Member for Lewisham, West (Mr. Dowd) made the point that there is a problem with auctions in some parts of London. Are we repealing a power that was not widely used because those who would transgress knew about it? If so, we should think carefully before we remove that power. Sometimes the passive existence of a power is sufficient to stop an evil, and the law accomplishes its purpose without taking people to court.
Article 6 represents a further erosion of the Sunday quiet that we have enjoyed hitherto. That takes me back to the point raised by my hon. Friend the Member for Belfast, South (Rev. Martin Smyth). I believe that Northern Ireland is wrong to move towards making Sunday into just another day of commercial activity. The matter was debated in the House, but unfortunately the Government carried the legislation into practice. Although we were not in favour of it, it is now the law of the land.
I think that it was a mistake, and that, in future years, it will be seen as such and we shall have to repeal it. Such a change does not create freedom; it simply promotes a licence that is misused by many people for many different purposes.
Turning to article 7, the same general point could be made about the Betting, Gaming, Lotteries and Amusements Order 1985. Those matters are being dealt with in the Deregulation Committee.
In respect of article 8, I am curious as to why a taxi driver should be treated in the same way as any other driver. A taxi is a public service vehicle taking citizens and non-citizens around on their lawful business. I believe that people need the full protection of very high-quality drivers. That has been the case hitherto. It helps to keep cowboys off the streets and should not be abandoned lightly.

Rev. Martin Smyth: Does that mean that the volunteers who drive people to and from hospitals are no longer required to get public service vehicle certificates, or does that requirement still exist?

Mr. Ross: My hon. Friend makes a valid point, which I hope the Minister will cover in his reply to the debate.
Article 9 permits Northern Ireland Departments to amend Northern Ireland legislation to include good practice procedures. We shall have to wait and see how that works out in practice.
Article 10 again permits certain changes in the Department of Economic Development, and gives it additional powers.
All those questions require answers. We cannot probe matters in the same way as the Deregulation Committee. The Minister may promise to answer our questions in writing, but that reply, with which we have become so familiar in appropriation debates, fails the test of public awareness. An answer is sent to an individual Member. It not on the record of the House or on the public record, and I hope the Minister will take that on board.
The contracting out part of the order brings Northern Ireland into line with Great Britain. There is much I could say about it, but I know that other hon. Members wish to speak. I have a problem with some of its provisions. The change to the dogs order is welcome, but there is a problem with the agricultural census order, and a particular problem with the social security administration order.
As for housing benefit, in Northern Ireland many citizens would prefer certain elements of confidential information to remain in the hands of Government rather than be transferred to private organisations. The safety of some people, such as members of the Royal Irish Rangers and police reservists, is paramount, and it is not beyond the realms of possibility for information to go astray once it passes out of the public domain and into private hands. Having said that, I give way to other hon. Members who wish to speak.

Mr. Anthony Steen: I have no problem with the contracting-out part of the order, but I have problems with the deregulation provisions. I always welcome measures that promote deregulation, and it was a pleasure to hear my right hon. Friend the Minister of State introduce the order in his normal inimitable way, which has been accentuated by the fact that it is his birthday today. What better way could there be of spending one's birthday than introducing such a measure?
I speak tonight because the people of Northern Ireland need to be warned: they must not have high expectations of the order. Our experience of the Deregulation and Contracting Out Act 1994 shows that little has happened since in the United Kingdom. That Act took 16 hours and 11 minutes on the Floor of the House, and another 92 hours 56 minutes in Standing Committee. One would have expected that to produce an outstanding Act of Parliament.
In fact, the Act established the Select Committee on which the hon. Member for East Londonderry (Mr. Ross) has had the privilege and honour of serving. It has not really been much of a privilege and honour, because the Committee has sat 34 times, each time for one and a half hours, and has considered only 24 deregulation orders. That must have been a galling experience.
The orders that the hon. Gentleman has considered with the Committee are to do with greyhound racing, parking equipment, and gaming machines; there have also been the long pull order, the length of the school day order,


salmon fisheries orders, special hours certificates and the gun barrel proving order. I can understand the hon. Gentleman's frustration at serving on the Select Committee. He would certainly not want the same to happen following enactment of this order.
Apart from four of the orders, the rest of them combined save business £628,000. The gun barrel proving order saves just £200, but cost £9,500 to draft. The Committee itself has created a new tier of bureaucracy. It has four full-time staff, it spends £31,000 on printing its reports, and it introduces a whole new parliamentary procedure. I am sure that the hon. Gentleman would not want Northern Ireland to follow that example.
Deregulation in the United Kingdom is a new growth industry. It is one of the fastest growing industries we have, in fact. I congratulate the Government on privatising this new form of industry. Even The House Magazine is organising a conference on how the system of deregulation works.
On the one hand, we are repealing irrelevant regulations to do with tattooing and casinos, saving business virtually nothing; on the other, we still churn out domestic and European legislation with heavier compliance costs than all the savings made in the name of deregulation.
Another problem is that Opposition private Members use their time to introduce Bills that cost private commercial businesses a great deal of money. The new legislation on activity centres is a case in point; it will cost businesses £10 million to enforce the relevant regulations. I therefore hope that Northern Ireland will learn from our experience and not go down the same track.
Worse than all this is the rise and rise in the number of statutory instruments. Since Lord Sainsbury's task force report, which suggested repealing 605 regulations, we have passed 7,839 new statutory instruments. I hope that this order will not achieve the same in Northern Ireland. There is no point in repealing regulations if we pass more than 12 times as many new regulations at the same time.
If the Government really want to deregulate, they will have to halt the flow of new statutory instruments. Another solution—I do not know if it is included in the order—is to cut the number of officials. If we reduce their numbers by 50 per cent., they will not be able to enforce the regulations. That is probably the most effective way of dealing with deregulation.
In short, the 1994 Act has failed to help the small business man. I mentioned in my intervention—I know it was far too long, but I did my best—the model appeal system. That system was designed to help the small business man to appeal against an over-zealous official. Over-zealous officialdom is certainly one of the problems. Surely the way to deal with such officials is by way of a local procedure; and what better way than the local magistrates court?

Mr. William Ross: Surely one of the best ways to deal with over-zealous public officials is to ensure that they are liable for costs, unlike the case that he mentioned in Scotland.

Mr. Steen: Absolutely—the hon. Gentleman is right. The trouble is that, where the local authority is penalised, the individuals who in turn are penalised are council tax payers, not individual councillors. That is the problem.
We do not have a model appeal system that works, and we need one. All we have is a consultative draft statutory instrument for a model appeal system. Nothing has been done.
Deregulation is, of course, right. We all support it. My right hon. Friend the Prime Minister, on the Floor of the House, said to me in answer to a question on 25 May 1995 that deregulation is at the heart of our economic strategy. He was absolutely right. Unfortunately, it is not working.
There seems to be no willingness to tackle the real issues, which are health and safety legislation, fire regulations, food hygiene and employment law. No official and no Minister will take the risk of repealing any legislation involving safety, security or hygiene, in case something goes wrong.
It is understandable that officials cannot recommend to a Minister that he should repeal something that bears on hygiene, safety or security in the event that things might go wrong. An official's job would be on the line, as would the Minister's. All the way up the ministerial ranks, and all the way down Whitehall, more and more rules and regulations are being introduced on health and safety, fire controls, food hygiene and employment law. At least those involved feel safer doing that.
I am anxious that the order before us does not lead Northern Ireland on the route that I have described. I am trying to give Northern Ireland a warning that what happened in England might happen there.
I am all for deregulation—it is a tremendous idea—but it needs to work better. I hope that Members who represent Northern Ireland, who are in the Chamber in great force, will ensure that the Government do not introduce an order that they cannot implement.

Mr. Eddie McGrady: The hon. Member for South Hams (Mr. Steen) has reinforced my opposition to the consequences of the order. There is considerable and justified opposition to many of its provisions among the community in Northern Ireland. The order is at variance with the wishes of many local groupings and interests.
In introducing the order, the Minister said that he had received 18 representations. He did not say—perhaps he will correct me if I am wrong—that only four were in favour of it. The other 14 were opposed. That is a fairly strong indictment of the course of action proposed.
The consequences of this form of legislation and the continuing process of privatisation, agentisation, or what is now called, euphemistically, in Northern Ireland "externalisation", are diminutions of democratic accountability within the present system. That seems to be at variance with the exhortations of the Secretary of State for Northern Ireland and other Ministers that we should be trying to enhance democratic accountability. The order flies in the face of all that.
There are differences of requirement in the society of Northern Ireland when set against requirements in Great Britain. I listened to the arguments in favour of harmonisation, but there are many instances where the system does not lend itself to literal translation of GB to NI. Health and education are only two examples of that.
The introduction to the deregulation section refers to necessary protection for consumers, employers and the environment.
A most startling omission is employees. It is mainly employees who will suffer when protection is removed. It is significant that employees are not mentioned at all in the introduction, and we may therefore conclude that they are being ignored. Additionally, part of the order's purpose is to remove consumer protection at a time when such protection needs to be enhanced, especially in horticultural food processing.
The deregulation provisions are of particular interest. I am no expert on the subtext of heads on pints of beer. The only thing I can conclude is that I do know what happens when several beers produce a head, which I carefully avoid. I am also confused by the fact that a legal duty to provide good measure has been totally removed. It is left simply, shall we say, to the good graces of the innkeeper or proprietor to provide not too much gas and a much greater property of liquid. I do not know how the innkeeper will respond to that, but I suspect that he will take a close look at what is gas and what is liquid.
Sport on Sunday is a contentious issue in Northern Ireland. The provision on that seems to have been just thrown in, without much consultation with the people and parties of Northern Ireland. I will probably be sat upon at home for hinting a warning about this. The Downpatrick race club, the oldest race club in Ireland, is anxious to be able to facilitate racing on a Sunday, so perhaps I am doing that community a disservice, but, in general terms, circumscription regarding keeping Sunday a separate day is not well removed without greater consultation.
Moving on quickly to taxi drivers, I simply repeat what was said. I cannot for the life of me see why people in charge of other people's lives in a public service vehicle should not have a more meaningful and exhaustive test than is provided by the order, which removes the current requirement.
The Minister made much of the cost savings that would occur in many of the order's sectors. The model appeal mechanism has been referred to. The hon. Member for South Hams said that a bureaucracy and costing system would be created by the necessity to police, as it were, the procedures on behalf of the offended parties. I doubt whether there will be any real saving, because other sectors will have to be brought into play.
Some of the Minister's examples on the contracting-out section were selective. He referred mainly to high technology and computerisation. Certainly, it was widely known in Northern Ireland in particular that many civil servants did not have a clue how to introduce computerisation into Departments, and should have had expert advice from outside before they engaged in it, so there is bound to have been considerable saving as they did not know how to do it in the first place.
On the contracting-out section, I am surprised to find that, in relation to the incorporation of companies, I think the Minister said, and to insolvencies, the registrar of companies and the insolvency agencies could be contracted out. In any commercial terms, those are sensitive areas. Until, for instance, incorporation is complete, contracting out would be extremely dangerous. The commercial sector will be wary of the fact that the

details, the capital involvement and the persons involved would all be available to a private firm and would not be within the confines of the Government's privacy provision. I am worried about the consequences of that.
I shall pass quickly over the contracting out of dog control, but not because it is not important. Northern Ireland is a rural area and a farming community, and it depends largely on an efficient service in that area. When that function was given to district councils, there was great dismay, but to be fair to the councils, they introduced a detailed and effective service, and it is working. The Government seem to be following the principle: "If it works, fix it." I do not think that any other service could be better than the present one, because no organisation could better the councils' activities in that respect.
On contracting out generally, in most instances, particularly in health and some other areas, the quality of the service has deteriorated. I do not think there is any dispute about that, and certainly the terms and conditions of employment have deteriorated considerably under privatisation. That is capable of absolute proof. Time prevents me from going into detail in many areas, but the issue that concerns me most is contracting out in relation to part 1V, article 17, and schedule 5(5), on social and other housing benefits that are currently dispensed and administered by the Housing Executive.
That is a large area of sensitive personal information. It relates to personal, financial, medical and social details, and details on special family problems. There are even personal details, and they all contribute to the making of decisions on benefit—or, indeed, housing. It is essential that that is kept secure by the Housing Executive, which has proved beyond doubt over the years that it is capable of effectively administering such matters.
Like other hon. Members, I am also greatly concerned about article 9 and the powers given to the various Departments without the necessary overriding constraints. Most of the suggestions in the order do not find great favour with me. It is the pursuit of dogma rather than of efficiency and savings.
In that context, the people I represent would certainly oppose the implementation of most of the order, because it will inevitably lead to the exportation of earnings from Northern Ireland. Consequently, there will be a rundown in some service jobs and perhaps some smaller manufacturing jobs. We could well do without that in an area of high unemployment. For those reasons, I entirely oppose the order.

Sir John Wheeler: In the remaining minutes at my disposal, I shall endeavour to deal with some of the points that have been raised in the debate, to which I listened with great interest. Perhaps I should outline the purpose of the order and reiterate how the implementation of its provisions will benefit both business and administration in Northern Ireland.
The deregulation provisions will remove unnecessary restrictions on business and open up new market areas. The contracting out provisions will widen the potential for Departments, district councils and other bodies to introduce competition and further improve the quality and cost-effectiveness of public services.
To take up the point of the hon. Member for South Down (Mr. McGrady), contracting out is an enabling measure, not a requirement. I believe that local authorities and others will wish to use the provisions of the order because they will want to get the best possible value for their money while retaining accountability. I shall deal with his concern about accountability straight away because I know that other hon. Members have an interest in it.
In all cases where a function is contracted out, the body letting the contract remains both accountable and legally liable for the acts and omissions of contractors in the same way as it is at present for its own or its employees' acts or omissions. Of course, Ministers remain responsible for policy to the House. I assure the hon. Member for South Down that there is no change in accountability. Indeed, it could be argued that a well-drafted contract makes the obligations among the different parties and interests more precise. It certainly makes the contractor more vulnerable to claims in the county court and by other means than would otherwise be the case.

Mr. McGrady: Accountability and responsibility are important in Northern Ireland. My experience as a Member of Parliament is that if I ask questions about a sector of a Department that has been agentised, my letter is not answered by the Minister, but referred to the agent. I cannot raise in the House questions that I have hitherto been able to raise on behalf of my constituents. The Minister may say that one is administration and the other policy, but the Howard situation shows that there is a grey area in between.

Sir John Wheeler: Mr. Deputy Speaker, we are moving beyond the scope of the order, but if you will allow me a brief indulgence, I shall try to assist the hon. Gentleman, because it is in the context of accountability that he raises his question. He is right to say that, where an agency has been established, it is the responsibility of its chief executive to respond to questions raised by Members of Parliament. However, Ministers are not removed from the scene; they remain firmly responsible for the policy objectives of the agency, and, indeed, set them.
In replying to questions from hon. Members, the chief executive of the agency is delivering direct and personal accountability for the work for which he or she is responsible. I suggest that that is an improvement in accountability. Instead of the chief executive being an anonymous civil servant, he becomes a person known in his or her own right, and accountability is accordingly advanced. Of course, the agency publishes its annual report and sets out its policy objectives. All those can be examined and challenged by Members of Parliament. I hope that the hon. Gentleman will accept that.

Mr. William Ross: The Minister has given a full explanation of how the agencies allegedly work, but does he really think that the Child Support Agency would have lasted as long as it did without major revamping if it had been directly under the control of a responsible Minister in the House?

Sir John Wheeler: Again, we go somewhat adrift of the order. However, the Child Support Agency has been the subject of detailed analysis, including that of the

Social Security Select Committee. One could therefore claim that the agency's accountability to the House and its Members has been very considerable. The Secretary of State for Social Security is of course responsible for policy, and I think that I am right in saying that, on many occasions on the Floor of the House, he has had to defend the agency's policy and its work. Perhaps the hon. Gentleman will therefore allow that there is still accountability. I suspect that the Minister responsible for the agency believes it to be so, even if nobody else does.
The hon. Member for South Down also referred to employees being ignored by the order. Employees are not ignored. Contractors are required to observe the requirements of equal opportunities legislation and of the Transfer of Undertakings (Protection of Employment) Regulations 1981, known as TUPE. Those provisions remain.

Mr. McGrady: Will the Minister gave way?

Sir John Wheeler: In fairness to other hon. Members who have spoken, I should like to make a little more progress. If the hon. Gentleman will allow me, I should like to catch up on one or two other points that have been made.
The hon. Member for Lewisham, West (Mr. Dowd) raised a number of points. He referred to forms in Northern Ireland. The importance of ensuring that forms are simplified and not too numerous is fully recognised by the Northern Ireland Departments. Indeed, a review of all forms unique to Northern Ireland and issued to business has been carried out by the Northern Ireland Departments, to ascertain whether all the forms are necessary and as user-friendly as possible. Of the 123 forms reviewed, 37 have been identified for redesign. So, work is in hand. The hon. Gentleman also asked whether there would be any significant changes in the licensing of taxi drivers. As is the norm, there would be consultation with the representatives of the organisations concerned.
The hon. Member for Lewisham, West also mentioned his interest in equal opportunities and fair employment. Since I have already referred to that, I can confirm that the Government are committed to promoting and securing equality of opportunity and equity of treatment for all people in Northern Ireland in accordance with the law. The equal opportunities legislation in Northern Ireland is among the most stringent in Europe, which underscores that point. Indeed, it is sometimes criticised for being so stringent. Guidance on market testing does not stipulate particular employment policies and practices, but it is made clear to the prospective contractor that he must comply fully with the relevant equal opportunities legislation. I am glad to tell the hon. Gentleman about that.
I thought that I also heard the hon. Member for Lewisham, West use the phrase "public sector bad; private sector good". I was puzzled about that, because his hon. Friend the Member for Dunfermline, East (Mr. Brown) has become a convinced convert to the concept of contracting out and the best use of public money. When he spoke at the Manchester business school on 29 April, he said, among other things:
The first question any government should ask about public spending is what any business manager would ask: not how much more money you should spend, but how to use existing spending better.


I agree with him and welcome his remarks.
In looking at the order, I think that that means that there has to be the means of testing that very concept. How does one test whether the public sector is delivering value for money and providing quality unless one has the means of testing through contracting out and market testing? The hon. Member for South Down, who appeared to question the whole concept, should perhaps look at the remarks of the hon. Member for Dunfermline, East. It is clear that, whoever forms the Government of the UK, those concepts are now a firm part of our public service thinking.
Other hon Members raised various points, and I shall pick up one or two of them. The hon. Member for Belfast, South (Rev. Martin Smyth) referred to spiritual values, and stated that they should be maintained as opposed to being deregulated. He referred in particular to the interesting part of the order that refers to a 1695 Act passed in the reign of our late sovereign William III—of blessed memory in Northern Ireland—and the intention of the order to allow participation in Sunday sport. I accept the hon. Gentleman's good intentions, but surely in this day and age it should be a matter for individual citizens—including those of Northern Ireland—to decide how to spend their time on a Sunday.
For many people, Sunday is the family day out, and deregulation of all Sunday sporting events will add to their choice. The hon. Member for South Down referred to Downpatrick race course—a facility that I have enjoyed visiting—and his dilemma as to whether the provisions of the order should apply there. If people want to go to the races on Sunday at Downpatrick, they should be allowed to do so. All hon. Members representing constituencies in Northern Ireland will know that, whatever the legislation says, it is almost impossible to reach Knutt's Corner on a fine Sunday in the summer because of the volume of traffic as people go to an illegal open-air market. People are therefore participating in activities on Sundays, and it is right that the law should be modernised to reflect what people wish to do.

Rev. Martin Smyth: The Minister said that I referred to a particular Act, but I did not. I asked my hon. Friend the Member for East Londonderry (Mr. Ross) whether he accepted that there were places that we did not want to go—especially when going down the road of materialism following the Gadarene swine. In that context, the Minister's last illustration shows that the law is not being exercised at Knutt's Corner market.

Sir John Wheeler: The hon. Gentleman should employ his undoubted skills as a preacher to inculcate moral values in the people in Northern Ireland. The civil law must reflect the customs and practice of people in our age, and one must recognise that people in Northern Ireland choose to exercise their judgment in these matters on Sunday at Knutt's Corner.
The hon. Member for East Londonderry (Mr. Ross) also asked why the order does not include the general order-making powers of the Deregulation and Contracting Out Act 1994. It is well established that, where policy changes are proposed and legislation is to be amended, proposals should be subject to parliamentary scrutiny. The general enabling powers in the Northern Ireland setting

would have meant that amendments to effect deregulatory changes or remove obstacles to contracting out would have to be effected by subordinate legislation without any parliamentary consideration. The Government thought that that approach was not acceptable and so decided to employ this legislation today.
The hon. Gentleman also asked whether people taking visitors to hospitals would still need PSV licences. Unfortunately, I cannot give him the answer that he sought on that, as PSV licences are not within the provisions of the order, and it will be necessary for me to make inquiries elsewhere in the Northern Ireland Departments. But when I have the answer to the hon. Gentleman, I shall write to him and give him the necessary information.
The hon. Member for South Down—

It being one and a half hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 14B (Proceedings under an Act or on European Community Documents).

The House divided: Ayes 101, Noes 14.

Division No. 119]
[11.45 pm


AYES


Ainsworth, Peter (East Surrey)
Heathcoat-Amory, Rt Hon David


Alexander, Richard
Hendry, Charles


Amess, David
Hughes, Robert G (Harrow W)


Ancram, Rt Hon Michael
Hunter, Andrew


Arbuthnot, James
Jack, Michael


Arnold, Jacques (Gravesham)
Jenkin, Bernard


Atkinson, Peter (Hexham)
Kirkhope, Timothy


Baker, Nicholas (North Dorset)
Knapman, Roger


Baldry, Tony
Knight, Mrs Angela (Erewash)


Banks, Matthew (Southport)
Knight, Rt Hon Greg (Derby N)


Bates, Michael
Kynoch, George (Kincardine)


Beggs, Roy
Lidington, David


Biffen, Rt Hon John
Lilley, Rt Hon Peter


Boswell, Tim
Luff, Peter


Bowis, John
MacKay, Andrew


Brandreth, Gyles
McLoughlin, Patrick


Brazier, Julian
Maginnis, Ken


Browning, Mrs Angela
Maitland, Lady Olga


Burt, Alistair
Malone, Gerald


Butcher, John
Merchant, Piers


Butler, Peter
Mitchell, Andrew (Gedling)


Carttiss, Michael
Molyneaux, Rt Hon Sir James


Cash, William
Monro, Rt Hon Sir Hector


Clarke, Rt Hon Kenneth (Ru'clif)
Newton, Rt Hon Tony


Clifton-Brown, Geoffrey
Nicholls, Patrick


Conway, Derek
Norris, Steve


Coombs, Anthony (Wyre For'st)
Ottaway, Richard


Coombs, Simon (Swindon)
Paice, James


Cope, Rt Hon Sir John
Pickles, Eric


Gran, James
Rathbone, Tim


Deva, Nirj Joseph
Roberts, Rt Hon Sir Wyn


Douglas-Hamilton, Lord James
Robertson, Raymond (Ab'd'n S)


Duncan, Alan
Robinson, Mark (Somerton)


Duncan Smith, Iain
Ross, William (E Londonderry)


Elletson, Harold
Rowe, Andrew (Mid Kent)


Faber, David
Shaw, David (Dover)


Fabricant, Michael
Sims, Roger


French, Douglas
Smith, Tim (Beaconsfield)


Gallie, Phil
Smyth, The Reverend Martin


Gillan, Cheryl
Spencer, Sir Derek


Goodlad, Rt Hon Alastair
Squire, Robin (Hornchurch)


Griffiths, Peter (Portsmouth, N)
Stanley, Rt Hon Sir John


Harris, David
Stephen, Michael


Hawkins, Nick
Streeter, Gary


Heald, Oliver
Taylor, Rt Hon John D (Strgfd)






Thompson, Sir Donald (C'er V)
Wells, Bowen


Thompson, Patrick (Norwich N)
Wheeler, Rt Hon Sir John


Townsend, Cyril D (Bexl'yh'th)
Whittingdale, John


Twinn, Dr Ian
Wood, Timothy


Wardle, Charles (Bexhill)
Tellers for the Ayes:


Waterson, Nigel
Mr. Simon Burns and


Watts, John
Dr. Liam Fox.




NOES


Brown, N (N'c'tle upon Tyne E)
Pope, Greg


Dewar, Donald
Prentice, Bridget (Lew'm E)


Dowd, Jim
Robinson, Peter (Belfast E)


Godman, Dr Norman A
Skinner, Dennis



Worthington, Tony


Illsley, Eric



McGrady, Eddie
Tellers for the Noes: 


Michael, Alun
Mr. Llew Smith and


Mowlam, Marjorie
Mr. Harry Barnes.

Question accordingly agreed to.

Resolved,
That the draft Deregulation and Contracting Out (Northern Ireland) Order 1996, which was laid before this House on 7th March, be approved.

Orders of the Day — DELEGATED LEGISLATION

Mr. Deputy Speaker (Sir Geoffrey Lofthouse): With permission, I shall put together the motions relating to delegated legislation.
Motion made, and Question put forthwith, pursuant to Standing Order No. 101(6) (Standing Committees on Delegated Legislation)

TRUSTEES

That the Trustee Investments (Division of Trust Fund) Order 1996 (S.I., 1996, No. 845), dated 18th March 1996, a copy of which was laid before this House on 19th March, be approved.

CHARITIES

That the draft Charities (Trustee Investments Act 1961) Order 1996, which was laid before this House on 21st March, be approved.

SOCIAL SECURITY

That the draft Jobseeker's Allowance (Pilot Scheme) Regulations 1996, which were laid before this House on 28th March, be approved.

That the draft Income Support (Pilot Scheme) Regulations 1996, which were laid before this House on 28th March, be approved.—[Mr. Conway.]

Question agreed to.

Orders of the Day — European Central Bank

Motion made, and Question Proposed, That this House do now adjourn.—[Mr. Conway.]

Mr. Llew Smith: In recent times, we have celebrated the end of apartheid in South Africa, the anniversary of the Chartist struggle in south Wales and the work of the suffragettes in other parts of the country. Those people had many things in common: their bravery, their sense of justice and their recognition of the potential power of the vote. Indeed, their struggles helped to ensure that the millions of people who were disfranchised eventually received the vote.
In the United Kingdom and in other parts of the European Union, we are considering ditching the things that those people fought and sacrificed so much for, merely so that we can become members of a single currency and the economic and monetary union. How will this affect the value of the vote that those people struggled for? The answer is simple: among other things, we shall have to become a member of the European central bank. The European central bankers will be responsible for the major economic decisions, they will be appointed for eight years and, no matter what damage they inflict on us, no one will be able to remove them.
Democratically elected Governments will be helpless if they wish to tackle problems such as unemployment and poverty—the power to do so will no longer be in their hands. If hon. Members doubt this, they should do what the Chancellor of the Exchequer failed to do some time ago—read the Maastricht treaty. In particular, I refer hon. Members to the part of the treaty that states:
Community institutions…and Governments of member states undertake not to seek to influence the members of the decision making bodies of the European central bank…in the performance of its tasks.
Not only will democratically elected Governments no longer be responsible for the major economic decisions; as that quotation shows, they will not even be able to influence those unelected and unaccountable bankers. While people will still have the right to vote, that vote will be a gesture—a charade—because the parties, peoples and Governments for whom they vote will no longer have powers to rectify the wrongs inflicted on them.
We saw an example of the transfer of powers from democratically elected politicians to unelected and unaccountable bankers some months ago. Then, the Chancellor of the Exchequer overruled the Governor of the Bank of England on interest rate levels; but, if we join the single currency, it will be the Euro-bankers and not the Chancellor of the Exchequer who will make decisions on interests rate levels, the money supply, Government borrowing and, indeed, whether we wish to devalue. As the Maastricht treaty reveals, the Chancellor of the Exchequer will not even be allowed to influence such decisions: if he does, he will be acting illegally. I hope that some hon. Members appreciate the irony of that.
In "A Partnership of Nations" the Government have the audacity to claim that they are trying to prevent
the erosion of national parliaments",


and they state elsewhere in the same document that they intend to
entrench subsidiarity into the Treaty".

That is nonsense. Subsidiarity means bringing power closer to the people; it certainly does not mean putting it into the hands of bankers. To agree to that process would be to betray our history of Chartism, and to betray the suffragettes and many other brave people.
Some, while recognising the undemocratic nature of the treaty, still seem to believe that all is not lost, because those bankers could still agree on progressive policies to create jobs and combat poverty. That would be a most unusual type of banker. If anyone is naive enough to believe such a notion, a quick glance at the treaty will reveal that the central bank's objective is not to overcome unemployment. There are 50 clauses and four protocols concerning price stability, but not one clause spells out anything about unemployment.
I am also interested in the position of the Welsh and Scottish nationalists: their pro-single currency, pro-European central bank stance, together with their dream of independence. If that should ever come about—I hope that it will not—they will immediately recognise that it is independence in name only. The most important decisions will be made by that most powerful of all quangos, the European central bank.
My position is straightforward. Not only do I—like the nationalists and others—oppose rule by quango in Wales, Scotland and other parts of the United Kingdom; unlike them, I also oppose such rule by quango from Europe. I want to extend democracy and accountability, rather than destroying them. Nor—this is linked to what I have just said—do I understand those who want to devolve power to a Welsh Assembly or Parliament, while at the same time supporting the centralisation of power in the hands of the European central bank in Frankfurt. The powers of all the quangos in Wales, Scotland and, indeed, the United Kingdom will be not nearly as great as those of that one quango based in Frankfurt.
The European central bank should not be seen in isolation from the single currency and economic and monetary union. What effect will the adoption of a single currency have on policy-making and our economy? Writing in the Sunday Times on 31 December last year, the respected political commentator Peter Kellner had this to say:
any country which abandoned its national currency not only loses the right to devalue; it also loses its power over interest rates, money supply and (to some extent) government borrowing…Britain would lose all real control of its economic destiny.
With a single currency, changes in interest rates, or the price of oil or food on the world market, will affect different countries in different ways. Yet national governments will lack the means to respond to the different problems that arise. They will have none of the financial levers that finance ministers normally use in order to avert recession or minimise hardship. If, for reasons outside its control a country tied to the euro suddenly becomes less competitive, its government will have little or no power to prevent a sharp rise in unemployment.
The European central bank, the single currency and economic and monetary union are all inter-related and dependent on one another, and all lead to a similar end: a society lacking in fairness, democracy and accountability. I find that unacceptable; I want to create

a society in which individuals, councils, Parliaments and corporations are more accountable and more democratic. I want to create a society over which people feel they have some control and in which they are not simply victims of the power game. I may be described as old Labour and old-fashioned. If so, all I can say is that I have no intention of changing.

Ms Diane Abbott: I congratulate my hon. Friend the Member for Blaenau Gwent (Mr. Smith) on obtaining this Adjournment debate. I want to address my remarks to the issue of independent central banks—whether the European central bank or central banks in general.
Economists like to see themselves as pursuing a scientific discipline, but more often than not it seems like a species of faith healing. Every year, economists seize on some new cure-all for the long-term decline of the British economy. In the 1970s, the big issue that economists liked to talk about was the balance of payments. A few years ago, the important remedy for the decline of the British economy was meant to be fixed exchange rates and the exchange rate mechanism. A recurring fashion in recent years has been the fashion for independent central banks. In the context of European monetary union, it would be an independent European central bank.
I want to explode some of the myths about independent central banks—whether about the European central bank or about making our own Bank of England independent. The argument for an independent central bank is that it will be more effective in dealing with inflation—if it were a European central bank, it would be more effective on a Europewide scale. That has been repeated so many times by politicians—both Labour and Government—and by economists, pundits and newspaper columnists that it has taken on the status of fact.
However, there is no statistical or empirical basis for the belief that simply having an independent European central bank, independent of politicians, will have any effect on European inflation levels. In 1994, the Treasury and Civil Service Select Committee, on which I have the honour to serve, considered the role of the Bank of England and issues relating to independence.
Our special adviser, Andrew Wood, said that, even where price stability was a central bank aim, there was only a weak causal connection between central bank independence and low inflation. Another of our advisers said that there was no conclusive statistical evidence of a causal relationship between the status of the central bank and inflation performance. In other words, the main empirical argument for a European central bank that is independent of politicians—that somehow it would help to keep inflation low—has no basis in fact. Yet politicians and pundits, whether in the context of debates about Europe or the Bank of England, continue to pursue that argument.
One may ask, if that argument has no statistical basis, why people have become so fixated on the notion that a European central bank that is independent of politicians would somehow bear down on inflation. I believe that that is simple reverse causality: because the Germans, who have had an independent central bank since the war, have been so successful in keeping down inflation, people think that a European central bank would have the same effect in Europe.
Anyone who has studied the German economy and politics knows, however, that there are all sorts of underlying reasons why German politicians and the German public have been so willing to swallow the policies that keep inflation low. The reverse causality argument—which says that, because the Bundesbank has been so successful, Europe needs a European central bank that is independent of politicians—does not stand up statistically.
Moving away from the facts and figures, the chattering classes and the people who claim to know about economics reiterate constantly the idea that monetary policy is so important that it should be taken away from politicians. They claim that the temptation for politicians to debase the currency should be removed. The argument for central bank independence and for a European central bank has found some favour with those not just on the Government Benches but on my own side.
In that context, I remind the House of evidence given to the Committee by Sir Douglas Wass, who, as some hon. Members will know, is a former permanent secretary to the Treasury. On the question of a European central bank that is independent of politicians, he said:
It is not the job of central bankers to judge how far it is right to go in damaging the standard of living of some members of the community, or destroying the jobs of others, in order to bring inflation on to some particular path. These are broad matters as much of social welfare as of economics. The decisions of ministers may not escape criticism; they rarely do. But, that it is and should be their responsibility to make the decisions, seems to us to follow from the nature of the decisions and the way they work".
That is the central argument against a European central bank. The statistical case that independent central banks bear down on inflation has yet to be made. The idea that one can extract monetary policy, with all its implications for unemployment, from wider political considerations seems quite wrong; in other words, decisions to do with the exchange rate and monetary policy are too important to be left to bankers—whether they are European central bankers or our own wonderful Eddie George.
I refer once again to Sir Douglas, because I think that, as an ex-permanent secretary to the Treasury, he might know more about the subject than anyone in the House. He said:
It seems to us to be fundamentally mischievous for a significant element of the polity affecting these issues to be removed from the domain of a democratically elected and responsible government and handed to that of an appointed and unaccountable central bank".
The arguments against an independent central bank—whether it is opposition to a European central bank or in opposition to giving independence to the Bank of England—are clear. There is no factual evidence to suggest that, if we had an independent European central bank tomorrow, it would be able to replicate Europewide the success that the Germans have had until recently in fighting inflation. It would be fundamentally undemocratic to take away from politicians and give to central bankers the important decisions that have such a wide-ranging effect on the whole community.
Like my hon. Friend the Member for Blaenau Gwent, I oppose economic and monetary union under the terms set out in the Maastricht treaty, because I believe that there are democratic issues involved. Even if a British Government—the current Government or a Labour Government—wanted to pursue precisely the same policies that are in the Maastricht criteria, the British

electorate should have the chance to elect the people who make those decisions. It is quite wrong for such important leaders of monetary policy to be handed over to central bankers. I am glad to support my hon. Friend in his Adjournment debate.

The Paymaster General (Mr. David HeathcoatAmory): The hon. Member for Blaenau Gwent (Mr. Smith) has chosen an important subject for his debate. He spoke with great clarity against the concept of a independent European central bank, chiefly on the ground of what he perceived as a lack of democracy.
The functions and powers of the European central bank are defined in the treaty of Rome, as amended—particularly as it was amended at Maastricht—which sets out the phased introduction and the steps on the way to full economic and monetary union in the European Union.
The bank is envisaged as being independent. It would be even more independent than the Bundesbank, which is frequently used as an example of a bank that is free of direct political interference. The object of making it independent is to ensure that it will deliver its primary objective—again as laid out in the treaty—of achieving price stability. One way of doing that is to ensure that political interference, particularly of a short-term nature, is minimised or eliminated altogether.
As the hon. Gentleman pointed out, that stage 3 of the economic and monetary union would entail the transfer of decision making about interest rates and monetary policy from the Bank of England and the Chancellor of the Exchequer to the European central bank. That would be an irreversible transfer of decision making.
The hon. Gentleman referred to the consequences of that. Although he gave a somewhat partial and one-sided view of the difficulties, he touched on important possible consequences and considerations that will have to be debated in the House and the country before we make a decision about that final transfer.
He was right to draw attention to the possibility of differential adjustments and external shocks affecting one part of the single currency zone as against another. In the past, Britain has been affected in different ways from certain continental countries by energy shocks, for example. If our interest rate were laid down by a single European central bank, we would give up national autonomy over interest rates. Therefore, we would be unable to adjust our interest rates to respond to a possible local recession.
The hon. Gentleman did not mention the possibility that labour could migrate out of countries in recession to other parts of the European Union. However, such migration is not a feature of the European Union and realistically would not be an effective short-term adjustment mechanism. Nor did he touch on the possibility that wages and prices would have to adjust to respond to those differences. I know that the hon. Gentleman would not welcome such a possibility because it could mean that wages and prices had to adjust downwards, at least in real terms. Moreover, many developments in EU social, economic and employment policy go in the opposite direction and possibly make the market more rigid and less responsive.

Ms Abbott: The Minister has talked about the possibility of wages and prices adjusting within an


EMU-type regime. We found when we entered the ERM and locked exchange rates—having been told that all would be well because wages and prices would adjust—that wages and prices did not adjust, the ERM exploded and we had to leave it rather ignominiously. Given that experience, what makes the Minister think that wages and prices would be any more responsive within EMU and under an independent European central bank?

Mr. Heathcoat-Amory: The hon. Lady is right to point out possible lessons to be learned from the ERM experience, which is why the Government have announced that they have no plans to re-enter such an exchange rate mechanism. But enthusiasts for a single currency point out that, if the possibility of a devaluation is permanently removed, other adjustment mechanisms might have to be found. So wages and prices might have to adjust in a way that does not happen now, while the other escape route is still available.
The other option is to respond to economic developments through expenditure and taxation mechanisms, although they will be somewhat restricted by the prohibition on excessive deficits which becomes binding in stage 3. That leaves only the possibility of large transfer payments between member states, which might require a very large increase in the European budget—an idea not being advanced in any quarter at present.

Mr. Llew Smith: The Minister rightly says that the transfer payments would be very large. Will he be more specific? He seems also to accept my point about the transfer of economic power from elected politicians to appointed and unaccountable bankers. If that happened, and the bankers gained the sort of powers that are written into the treaties, what powers would be left to the

Chancellor of the Exchequer and a democratically elected Parliament with which to bring about the changes that the Government of the day thought necessary?

Mr. Heathcoat-Amory: I have to answer two complicated questions in half a minute. Any formal influence is ruled out by the treaty: member states "shall not" directly influence their members of the European central bank. The size of the European budget might have to increase enormously to render the adjustment mechanisms comparable with those available to member states in the form of their tax and expenditure programmes.
In the United States, a very large federal budget acts as a stabilising mechanism. When a state or zone goes into recession, it pays fewer taxes to the federal Government and receives back larger benefit payments. That acts as an automatic stabiliser of some potency. For the European budget to act in that way, the present 1.2 per cent. maximum of gross national product which forms a ceiling to the budget would have to be removed altogether, and there would be a spectacular increase in the size of that budget.
Luckily, my right hon. Friend the Prime Minister secured the opt-out from stage 3, so it will be up to this House and the Government of the day to make the decision.
Unhappily, the Opposition are not enthusiastic about the opt-out. They have agreed in principle to stage 3 and they have not promised that they would hold a referendum, if and when they have an opportunity to recommend stage 3. I call that a severe democratic deficit on the part of those who occupy the Opposition Front Bench, which no doubt the hon. Gentleman and the hon. Lady will take up with the leaders of their party.

Question put and agreed to.

Adjourned accordingly at twenty-four minutes past Twelve midnight.